The pound strengthened for a second day versus the euro after Bank of England Governor Mervyn King said yesterday inflation targeting should remain at the heart of monetary policy. Sterling slipped for a fourth day against the dollar, the longest run of declines in more than two months, before U.K. Prime Minister David Cameron addresses the Conservative Party Conference in Birmingham, England, later today. The pound gained 0.1 percent to 80.45 pence per euro as of 7:50 a.m. London time, after dropping to 81 pence yesterday, the weakest level since Sept. 17. Sterling declined 0.1 percent to $1.5990, after dropping to $1.5977, matching the lowest since Sept. 10. “The case for price stability is as strong today as it was 20 years ago,� King said at the London School of Economics yesterday. While there are circumstances where it may be “justified to aim off� the central bank’s inflation target of 2 percent for a while, he said this wasn’t a call for a change to the bank’s remit. The pound has strengthened 0.5 percent in the past six months, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro fell 2.2 percent and the dollar weakened 0.3 percent. Gilts returned 3.1 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bonds also gained 3.1 percent and U.S. Treasuries rose 1.9 percent. To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

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