CURRENCY : British Pound Gains but Gives Way to Profit Taking

The dollar gained against most major currencies Tuesday in reaction to weakness in the British pound. Gold prices also rose.

Republic National Bank of New York said gold was bid at $446 an ounce as of 4 p.m. EST, up from $441.90 an ounce late Monday.

The British pound rose sharply during a budget announcement by Chancellor of the Exchequer Nigel Lawson, who reported Britain’s first budget surplus in nearly 20 years.

Later, though, the pound fell back as investors cashed in on paper profits and word that the Bank of England was selling sterling to stem its rise.

As sterling fell, the dollar benefited, said Frank Conte, vice president for foreign exchange in the New York office of Barclays Bank.

In late London trading, the British pound was quoted at $1.8570, down from $1.8575 Monday. Later, in New York, the pound was quoted at $1.8455, down from $1.8540.

In Tokyo, where trading ends before it begins in Europe, the dollar rose 0.02 yen to a closing 127.25. Later in London, the dollar was quoted at 127.10 yen. At the end of the trading day in New York, the dollar rose to 127.38 yen, up from 126.78 late Monday.

Other dollar rates late Tuesday in New York, compared to late Monday, included: 1.6699 West German marks, up from 1.6629; 1.3805 Swiss francs, up from 1.3718; 1.2539 Canadian dollars, down from 1.2572; 5.6660 French francs, up from 5.6395, and 1,237.00 Italian lire, up from 1,231.25.

Gold rose in London to a late bid price of $443.50 an ounce, compared to late Monday’s $441.00. In Zurich, the late bid price was $442.50, up from $441.50 late Monday. On the Commodity Exchange in New York, gold bullion for current delivery was bid at $446.30, up from $441.90 late Monday.

Earlier, in Hong Kong, gold fell $1.54 to close at a bid of $443.27.

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