Signs of improvement in Europe's largest economy helped bolster the euro in the last 24 hours.
This morning the euro stood at 1.4563 to the pound, with the dollar at 1.2307 against the single currency.
Data released by the Munich-based Ifo institute showed that against its index of business sentiment there had been marked improvement in the outlook for German companies.
The indicator rose to 102.0, building on a score of 99.7 in December, well ahead of analyst expectations.
Michael Klawitter, a strategist with WestLB, told Bloomberg: "A rise in Ifo raises expectations of higher rates and would help the euro."
"The market may start to price in more of a risk of a February rate hike," he added, alluding to potential European Central Bank movements.
Meanwhile, in the UK, new figures from the Office for National Statistics (ONS) indicated that economic growth had been accelerating at a faster rate than anticipated.
GDP rose by 0.6 per cent in the fourth quarter, the ONS said.