The pound gained for a third day against the euro after Standard & Poor’s lowered Italy’s credit rating, boosting investor demand for the perceived safety of the British currency. Sterling strengthened versus most of its 16 major peers tracked by Bloomberg after S&P cut Italy’s rating one notch to A from A+, citing a weaker economic growth outlook. Ten-year gilts rose for a third day, while the two-year yield approached a record low. The pound was 0.2 percent stronger at 86.95 pence per euro at 8:22 a.m. in London. It reached 86.71 pence yesterday, the strongest level since Sept. 14. Sterling was little changed at $1.5705, after falling to $1.5633 yesterday, the least since Jan. 12. Sterling has fallen 5.4 percent in the past 12 months, making it the second-worst performer among 10 developed-market currencies after the U.S. dollar, according to Bloomberg Correlation-Weighted Currency Indexes. The 10-year gilt yield fell four basis points to 2.35 percent. The two-year yield was little changed at 0.53 percent, after reaching 0.492 percent. It declined to 0.49 percent on Sept. 12, the lowest since Bloomberg began collecting data on the securities in 1992. To contact the reporter on this story: Keith Jenkins in London at Kjenkins3@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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