The euro pounded sterling on the foreign exchanges again yesterday, after a survey revealing a surprise rise in German business confidence reduced the chances of a near-term cut in benchmark interest rates in the 15-nation eurozone.

Jean-Claude Trichet, president of the European Central Bank, further bolstered the single currency by reiterating that his focus was on inflation.

His remarks came as Bank of England chief economist Charlie Bean piled more pressure on sterling by warning the risks to the currency "are balanced to the downside".

The euro was last night trading up more than 0.6p on the session at around 78.62p, having touched an intra-day high of 78.88p.

The Ifo economic research institute in Germany said yesterday that its index of business confidence in the country, which is Europe's biggest economy, had risen for a third consecutive month in March to the highest level since last August. The index therefore points to the greatest business confidence in Germany since the very early stages of the global credit crisis.

Ifo's headline business climate index rose from 104.1 last month to 104.8, wrongfooting financial markets because economists had forecast a fall to 103.4 points.

The ECB has held eurozone interest rates since the global credit crisis kicked off in earnest last summer.

In contrast, the US Federal Reserve has cut benchmark interest rates in the world's largest economy from 5.25% to 2.25%. The Bank of England has cut UK base rates by a quarter-point on two occasions, on December 6 and February 7, to take them to 5.25%.

Testifying before an economic committee of the European Parliament, Trichet said: "If we have maintained interest rates at the present level (4.0%), it is because we believe that it corresponds to what is necessary to deliver price stability in the medium term. In times of turbulence, hectic behaviour (and a) high level of volatility, the solid presence of public institutions like central banks is decisive."

This was interpreted by financial markets as a signal that the ECB was in no hurry to cut eurozone interest rates.

The resilience of the German economy is particularly surprising given that the euro's near-record levels make its exporters less competitive on the global stage.

Jennifer McKeown, at consultancy Capital Economics, said yesterday: "The further rise in the German Ifo business climate index in March has added to the evidence that the economy is bearing up surprisingly well against an adverse global environment.

"By sector, a pick-up in the manufacturing index suggests that the sector has not been hit too hard by weakening global demand. The retail index fell a touch, but remains well above the low levels seen at the turn of the year."

McKeown cautioned: "Slowing global demand and the strong euro must surely take their toll on German business confidence at some point. But, for now, this buoyant survey adds to the evidence that the slowdown in German GDP (gross domestic product) growth this year will not be too sharp."

The European Commission expressed concern yesterday about the euro's rise, saying it added to strengthening headwinds facing eurozone growth, but maintained its forecast of 1.8% expansion during 2008.

Economists also expect UK growth to fall from about 3.1% last year to 1.8% in 2008 because of the chill wind from the US, which is either in or on the brink of recession, and an associated global credit crisis which has its roots in massive default on home loans by US households with poorer credit ratings.