Dec. 29 (Bloomberg) -- The British pound weakened to a record 98 pence per euro after an industry report said U.K. house prices will probably extend declines next year, boosting the case for deeper interest-rate cuts by the Bank of England.

The currency also fell for a second day against the Swiss franc. Hometrack Ltd. said U.K. residential property values slid 8.7 percent in 2008 across the country, led by a 10.1 percent drop in London. House prices will “inevitably” decline in 2009, the property researcher said.

“Parity is ever more likely,” said Daragh Maher, deputy head of global foreign-exchange strategy in London at Calyon, the investment-banking unit of Credit Agricole SA. “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.”

The pound depreciated as much as 2 percent to 98 pence per euro, its sixth straight decline. It was trading at 97.90 pence as of 2:33 p.m. in London, from 96.10 pence at the end of last week. It sank 25 percent against the European common currency this year, the most since the euro was introduced in 1999. Sterling fell 2.2 percent to 1.5263 francs. Against the dollar, it rose 0.2 percent to $1.4608, from $1.4580.

To contact the reporter on this story: Matthew Brown in London at mbrown42@bloomberg.net

Last Updated: December 29, 2008 09:45 EST