The euro hit a record high against sterling this morning and also rose towards record levels against the dollar.
This came after comments from a top euro zone official reinforced the view that the European Central Bank is unlikely to cut rates any time soon.
Speaking after data from four German states pointed to a likely inflation pick-up, ECB Governing Council member Axel Weber said price pressures were alarmingly high.
The ECB's focus on fighting inflation is in sharp contrast to the stance of the US Federal Reserve, which has slashed interest rates, and the Bank of England, which is also expected to make more rate cuts.
The euro was trading just above 79p sterling this afternoon, having hit a record 79.29p earlier. Against the dollar, the euro slipped back from $1.58 to around $1.5770 after better than expected US figures on inflation.
