Reports that eurozone inflation is set to be above target have helped lift the euro.

The euro started the day at $1.28505 and £0.67815 as it is believed inflation could hit as much as 2.5 per cent - above the European Central Bank's (ECB) target.

With higher inflation the ECB may be forced to increase interest rates - spurring buyers to pick up the euro.

The euro also made gains on sterling as the minutes from the last meeting of the Bank of England's monetary policy committee (MPC) show that a further interest rate rise may not be necessary.

The MPC minutes reveal there was a six to one vote in favour of a 0.25 interest rate hike, but further increases may not be imminent.

The minutes stated: "An early increase in rates would reduce the risk that a sharper rise would be needed later."

It also added that when the medium-term out look for growth and inflation became clearer, the MPC would be able to reverse its decision if necessary.