Pound Loses Against Dollar; Gold Off

Britain’s pound dropped more than two cents against the dollar Monday because of fears about an intensified oil price war and the U.S. currency declined for the eighth day against the Japanese yen to a 7-year low.

Gold prices fell in quiet trading. As of 4 p.m. EST, Republic National Bank of New York said gold was bid at $344 an ounce, down from $349 bid late Friday.

Analysts said the dollar was stronger against most currencies largely because of Commerce Department figures that showed U.S. construction spending rose 2.8% and factory orders rose 2.7% in December.

Those figures suggested the U.S. economy is growing faster than anticipated and lessens the need for the Federal Reserve Board to cut the discount rate, the fee charged to lend banks money. It has stood at 7.5% since May.

A lower discount rate would lead to lower interest rates and stimulate the economy, but make dollar-denominated investments less attractive.