The euro was down slightly against the dollar, as the outgoing Federal Reserve chairman Alan Greenspan signalled a hike in rates.

This morning the dollar was at 1.2101 against the euro and 1.7764 to the pound.

Mr Greenspan confirmed that rates would be put at 4.5 per cent, a quarter percentage point increase.

The news in itself was not unexpected, but comments surrounding the 14th successive rate rise suggested there could be further moves before the Fed decides it has reached the end of the current cycle.

After a slew of positive economic data in the US this month in the manufacturing and consumer confidence sectors, a slight shift in emphasis in the Fed statement left many analysts predicting further interest rate increases.

In a statement the Fed said that "some further policy firming may be needed" to combat inflation.

Ben Bernanke is due to take the helm at the Federal Reserve, while it emerged today that Mr Greenspan will be offering advice to the British treasury.