Sterling fell against the dollar on Tuesday after stronger than expected US consumer confidence data triggered a broad-based rally in the greenback. Having spent most of the European session shuttling in tight ranges, sterling dropped to the day's low of $1.8258 as the US consumer confidence index came at 106.1 in July, beating the forecast of 102.
"(The confidence data) is an additional indication the US economy is recovering. Sterling is broadly tracking euro/dollar in the past 24 hours," said Francesca Fornasari, currency strategist at Morgan Stanley.
By 1435 GMT sterling stood at $1.8260, down three quarters of a percent.
Against the euro it stood at 66.06 pence, slightly down on the day, having hit a one-month peak of 65.87 pence earlier.
The pound got a boost on Monday from news that Britain's second-largest mortgage lender Abbey National had agreed an 8.0 billion pound take-over by Spain's biggest bank, Santander Central Hispano.
The cash component of the deal is relatively small but analysts said sterling could benefit if retail investors in Abbey, currently about 30 percent of the shareholder base, decide they do not want shares in the enlarged Spanish bank.
Sterling's trade-weighted index, which has a euro weighting of 64.82 percent, a dollar weighting of 16.49 percent and a yen one of 7.0 percent, also fell from a one-month high set on Monday.
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