The euro rose sharply this evening, topping $1.43 for the first time in more than a year ahead of a widely expected European Central Bank rate hike.
As the dollar weakened, gold soared to record highs as investors hedged their bets against a bad news backdrop of Middle East unrest, rising oil prices, Portugal's debt problems and Japan's efforts to recover from last month's devastating earthquake.
The euro hit as high as 1.4332, up from $1.4221 yesterday. Speculation about the ECB rate decision is the main driver for trade, analysts said.
The Bank of England also meets tomorrow but it is expected to keep its record low interest rates of 0.5% on hold while the US Federal Reserve appears to be in full debate about its stance as stimulus measures end.
ECB president Jean-Claude Trichet said last month that the bank's record low rate of 1% might be raised amid concern that inflation now at 2.6% could spiral out of control.
Subsequent comments by Trichet and other bank officials along with economic data have made a rate hike almost certain despite the Japanese crisis and unrest in the Middle East.
The euro was also worth 87.8 pence sterling this evening.
