The euro strengthened against the dollar Tuesday, as inflation numbers in Germany, Europe's largest economy, underlined recent European Central Bank indications that interest rates were more likely to rise in the future. The 12-nation currency bought US$1.2133, up from US$1.2121 in New York late Monday. The British pound dropped against the dollar, slipping to US$1.7675 from US$1.7681 overnight. Germany's Federal Statistics Office announced Tuesday that inflation for 2005 increased by 2 percent -- the highest jump since 2001 -- driven by the rapidly climbing energy prices. Late last week ECB President Jean-Claude had warned the bank would be vigilant about inflationary pressures amid signs that growth is picking up.