UK’s Brown warns against sterling target

British Prime Minister Gordon Brown warned on Wednesday against any policies directed at managing the pound's exchange rate.

Brown said previous British attempts at targeting exchange rates had failed and that current Bank of England policy was to target inflation, in response to a question from opposition Conservative leader David Cameron.

"That is the best way to bring about recovery in the economy and I would caution him (Cameron) and his party against any policies that would target sterling," he said.

The pound has weakened by around 20 percent against the euro <EURGBP=> since October, prompting calls from French Economy Minister Christine Lagarde last week for Britain to do something about its currency,

But Brown and the Bank of England have been unperturbed by the decline — which has partially reversed in the last week — because of its potential to boost the price competitiveness for British exports during the global economic downturn.

Britain last had an exchange rate target in 1992, before it was ejected from the European Exchange Rate Mechanism, a forerunner to the euro, when a recession meant it was unable to keep its peg to the German mark.