The euro rose against the dollar on Wednesday following speculation that interest rates may soon be on the rise again.

This afternoon the euro stood at 1.4578 to the pound and was at 1.7359 against the dollar.

European Central Bank (ECB) member Axel Weber warned that rates could rise from the current figure of 2.5 per cent over the coming months due to inflation risks, despite last week's 0.25 per cent increase.

Mr Weber told a dinner in Dusseldorf yesterday that there is "considerable excess of liquidity" in the economy.

The euro rose by 0.3 per cent to $1.1930 this morning and is up almost one per cent on the dollar for the year.

"It's consistent with the message that rates are going to go higher and that's definitely a positive for the euro,'' Marios Maratheftis, a currency strategist at Standard Chartered told Bloomberg.

"Although the ECB might not close the rate gap with the US there will be some competition rather than further widening," he added.

European finance ministers are expected to discuss plans for further rate hikes on Monday.