The euro rose against most major currencies yesterday after the European Central Bank's (ECB) decision to hold interest rates led to speculation of an August hike.

This morning the euro bought 0.6953 pounds and 1.2776 dollars.

The ECB held rates at 2.75 per cent but analysts took president Jean-Claude Trichet's comments calling for "strong vigilance" against inflation as a sign that rates would rise as the year goes on.

A report on the German economy, the eurozone's largest, may also boost the currency today as it is expected to show growth of 0.6 per cent for May following growth of 1.6 per cent for April, Bloomberg reports.

"It appears that the timing of the next increase is likely to be the beginning of August," Emanuele Ravano, co-head of European strategy at Pimco, told the Financial Times.

Martin van Vliet, analyst at ING Financial Markets, agreed, telling the

FT: "The door is now wide open for an early August rate hike."