Sterling rose against the euro on Wednesday buoyed by news of intra-European takeovers as traders look to the Bank of England today for positive news on interest rates.

The dollar stood at 1.8481 to sterling this morning, while the euro was at 1.4489 against the pound.

The main news in the UK today is the meeting by the Bank of England on interest rates where the Monetary Policy Committee is widely expected to keep rates on hold at 4.5 per cent.

The decision will signal the tenth month in a row that the rate has stayed on hold, but with fears of rising inflation there is pressure for the bank to raise rates in the summer with most predicting a hike in August.

"What is becoming clearer is that the next move will probably be up,"

Trevor Williams, chief economist at Lloyds TSB Financial Markets told the BBC.

In the eurozone it is expected that the European Central Bank (ECB) will raise rates when it meets in Madrid today.

It is widely predicted the bank will increase rates to 2.75 per cent with further increases predicted over the summer.

"The ECB won't stop at 25 basis points, as recent domestic data has been really strong,'' Silvia Pepino, an economist at JP Morgan in London, told Bloomberg.

"It even increases the possibility of a July move."