Euro up, British pound at 14-year high against U.S. dollar

The euro rose and the British pound climbed to its highest level against the U.S. dollar in more than 14 years on Tuesday following positive economic data from Europe.

Photo: Euro up, British pound at 14-year high against U.S. dollar

The 13-nation euro bought US$1.3033 in afternoon European trading, up from US$1.2954 in New York late Monday.

The pound rose as high as US$1.9895 from its level Monday of US$1.9764 reaching its highest level since the week before the so-called "Black Wednesday" in September 1992, when Britain crashed out of the European Exchange Rate Mechanism.

The euro rose pulling the pound with it after new data showed that euro-zone factory orders rose by 1.4 percent on the month in November beating economists' expectations of a 1 percent increase.

The pound, which appeared headed for the US$2 mark near the end of last year but then retreated, has been helped recently by a surprise Bank of England interest rate increase this month.

The euro has been supported by perceptions that the European Central Bank will continue raising interest rates while the U.S. Federal Reserve keeps its rates on hold as it has over recent months or even cuts them.

On Tuesday, European Central Bank board member Lorenzo Bini Smaghi was quoted as underlining the possibility that the ECB, which has raised rates several times over the past year, could move again, reports AP.

The ECB strategy has not changed and aims at "counteracting inflationary pressures before they appear," Bini Smaghi was quoted as saying by Italian daily La Repubblica. "This requires that interest rates are adjusted on the economy growth pace."

Higher interest rates, a weapon against inflation, support a currency by making some assets denominated in that currency more attractive to investors.