The euro rose against the dollar on speculation that the region's interest-rate advantage over the U.S. will draw investors after a European Central Bank official signaled a cut in borrowing costs is unlikely. The euro approached a record high against the British pound after ECB council member Axel Weber said yesterday that rates may have to rise as the economy recovers. ``The euro is getting a boost from these hawkish comments from the ECB,'' said Hiroshi Yoshida, foreign-exchange trader in Tokyo at Shinkin Central Bank, Japan's fifth-largest publicly traded lender by assets. ``Investors have been given good reason to start pricing out a rate cut in Europe. From the dollar's perspective, any rise in oil is unwelcome.'' The EUR/USD is currently trading at $1.4765 as of 7:40am, GMT.

The UK pound fell yesterday to 1.8280 against the dollar and 80.23 against the euro, a survey from Nationwide Building Society, the nation's fourth-biggest mortgage lender, showed the average value of a home dropped 1.9 percent in August, exceeding economist's estimates for a decline of 1.5 percent. Loans approved for house purchases slumped 65 percent last month, the British Bankers' Association said yesterday. The U.K. economy may shrink over the next year as a deepening recession leads to the first full-year fall in national income since 1991, the London-based Times reported, citing Capital Economics. The GBP/USD is currently trading at $1.8360 as 7:58am, GMT.

Fannie Mae Chief Executive Officer Daniel Mudd replaced three top deputies in an effort to restore investor confidence after record losses and a 90 percent drop in the shares. Mudd is seeking to show investors the company is taking action after $9.4 billion of losses the past four quarters eroded capital and sparked concern the company may not weather the worst housing slump since the Great Depression. The decline prompted U.S. Treasury Secretary Henry Paulson to forge a rescue package for the company and smaller rival Freddie Mac.

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