The pound dropped to a record against the euro as a report said U.K. house prices are likely to extend declines in 2009, strengthening the case for further interest-rate cuts from the Bank of England. The currency also slipped for a second day versus the Swiss franc after Hometrack Ltd. said U.K. residential property values fell 8.7 percent in 2008 across the country, led by a 10.1 percent drop in London, and that further house-price declines are inevitable. “Sterling’s had to contend with the soft house-price numbers overnight,” said Daragh Maher, deputy head of global foreign-exchange strategy in London at Calyon, the investment banking unit of Credit Agricole SA. Retailers haven’t “had a particularly good December,” he added. The pound depreciated as much as 1.9 percent to a record 97.97 pence per euro, its sixth straight daily decline. It was trading at 97.74 pence at 12:05 p.m. in London and has fallen 25 percent against the European currency this year, the most since it was introduced in 1999. Sterling dropped 1.9 percent to 1.5308 francs and strengthened 0.6 percent to $1.4662. More than 1,600 people will lose their jobs in the U.K. every day in 2009, the Daily Telegraph reported today, citing a report by the Chartered Institute of Personnel and Development. A total of 600,000 face being put out of work next year, the newspaper said. “Parity is ever-more likely,” Maher said. “Euro-sterling appears to have reasonable upward momentum, and there’s no immediate hurdle to that. If there’s going to be a turnaround in euro-sterling, it needs to come from the euro angle.” Outlook for Parity Europe’s manufacturing industries may have contracted for a seventh month in December, according to economists in a Bloomberg survey. The measure will decline to 34.5 from 35.6 last month, confirming previous estimates from Markit Economics in London. A number below 50 indicates a contraction. The report is due on Jan. 2. U.K. government bonds fell, pushing the yield on the 10- year gilt up seven basis points, or 0.07 percentage point, to 3.12 percent. The 5 percent security due in March 2018 slipped 0.57, or 5.7 pounds per 1,000-pound face amount, to 114.96. The two-year gilt yield increased four basis points to 1.20 percent. Gilts declined as gains in equity markets sapped demand for the safest assets. The FTSE 100 index of leading U.K. stocks advanced 2.4 percent today.

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