The euro has regained ground against the dollar and sterling as the French put interest rate rises back on the agenda.
The single currency has climbed back above $1.06 pushing more that 1p onto the pound against sterling. The euro closed at $1.0616 from $1.0504 a day earlier and at 64.65p against sterling from 63.68p on Tuesday. As a result the pound closed at 82.04p from 80.85p a day earlier.
The euro was supported after the European Central Bank vice president Mr Christian Noyer repeated comments that growth was picking up and inflation risks had risen.
The recent ECB decision to slow down on gold sales has also inadvertently strengthened the euro, according to Ulster Bank economist Mr Aziz MacMahon. Gold prices rose, leaving many US traders and hedge funds offside and sellers of the dollar.
The German finance ministry said in its monthly report that the economic outlook had improved markedly recently and that it was confident an acceleration in growth was already in place.
Nevertheless, yesterday's comments from Mr Noyer only serve to underline the different growth prospects in France and Germany, Mr Hunt said.
He added that despite this rise in the euro there is still a danger that the pound could sink back below 80p. "Here are more reasons to buy sterling than to sell it. Interest rates are going up, there is a very active monetary policy committee and the economy is going to enjoy a significant rebound into next year."
