The Dollar fell against the Euro on Thursday, dragged down by persistent worries over the health of US financial sector, as shares and bonds of the
country's two mortgage finance giants tumbled on capitalization fears. The yield spread premium for the larger Fannie Mae rose to its highest since before the Fed's bailout of US Investment bank Bear Stearns in March.
Investors were slightly reassured by comments by Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson in testimony to Congress that they were doing everything possible to restore calm to financial markets.
Bank of England held interest rates steady at 5% on Thursday, but analysts say rates will have to fall, making the GBP less attractive.
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