The euro climbed to a three-year high on Friday after German Chancellor Angela Merkel's conservatives and rival Social Democrats reached a breakthrough in coalition talks. The news gave fresh legs to the current rally being driven by expectations that the European Central Bank may quicken the pace of trimming its massive monetary stimulus.
In early London trading on Friday, the euro rallied 0.7 per cent against the dollar to hit its highest levels since January 2015 at $1.2120. On a two-day cumulative basis, the single currency has jumped 1.4 per cent, its best performance since August last year.
On Thursday, minutes of the ECB's December meeting showed policymakers could revisit their communication stance in early 2018, boosting expectations that they are preparing to reduce their vast monetary stimulus programme.