The pound fell against the dollar by the most since Jan. 2 as stocks dropped and a Confederation of British Industry report added to evidence of an economic slump. The pound also had its biggest slide versus the euro in two weeks and tumbled against the yen as every major stock index in Europe declined. U.K. banks, insurers and financial-services companies may cut as many as 15,000 jobs in the first quarter amid a plunge in business confidence, the CBI said today. Prime Minister Gordon Brown pledged 500 million pounds ($758 million) today to encourage hiring. The pound’s fate “is dominated by how stocks are moving and perceptions of risk are moving, which is why we have this weakness,” said Steven Barrow, head of G-10 currency research at Standard Bank Plc in London. “The correlation between the pound and risk aversion remains strong.” The U.K. currency dropped 2 percent to $1.4867 as of 3:03 p.m. in London. It weakened 1.4 percent to 90.00 pence per euro, and to 133.30 yen, from 137.09. The Bank of England cut its key interest rate to 1.5 percent last week, the lowest level since it was formed in 1694, to prevent the recession from deepening. Revenue and profitability in the financial-services industry fell at a record rate in the final three months of 2008, the CBI said. U.K. government bonds fell, pushing the yield on the 10- year gilt up two basis points to 3.16 percent. The 5 percent security due March 2018 fell 0.20, or 2 pounds per 1,000-pound face amount, to 114.56. The two-year gilt yield fell two basis points to 1.57 percent. The MSCI World Index fell 0.9 percent, its fourth straight decline. The U.K.’s FTSE 100 Index lost 0.3 percent.

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