Dollar Gains; Pound Falls Sharply

The dollar made strong gains against major currencies Tuesday amid falling interest rates in Britain and prospects of higher rates in the United States.

The British pound fell sharply. In New York it cost $1.3415 to buy a pound, more than 3 cents less than the $1.3723 that it cost Monday. In London, the pound dropped to $1.3462, compared to $1.3703 on Monday.

Gold was also down by at least $2 an ounce.

Currency dealers said Tuesday’s start of a U.S. Treasury auction of a record $21.75 billion in government securities, together with a shift out of the pound and other European currencies, lent support to the rising U.S. currency.

The auction of notes and bonds, through Thursday, “is expected to exert slight upward pressure on long-term bond yields, therefore making U.S. securities more attractive to investors,” said Gary Dorsch, senior money-market analyst at G. H. Miller & Co. in Chicago.