Sterling tumbled two cents against the dollar and shed about one percent versus the euro on Tuesday after news of a surprise fall in UK manufacturing output in March cast doubts over expectations of interest rate hikes.
Though economists had widely predicted a rebound in the sector, data showed manufacturing output fell 0.3 percent on the month.
The news knocked sterling to five-month lows of $1.7535 and 1-1/2 lows of 67.36 pence per euro.
The figures are likely to cause concern among policymakers at the Bank of England, who raised interest rates last week for the third time since November and have said a sudden decline in February manufacturing might have been a rogue figure.
"The data undermined expectations for the UK economy, it reduced the expectations for UK rate hikes to some extent and undermined sterling," said Adrian Schmidt, currency strategist at Royal Bank of Scotland Financial Markets in London.
At 1500 GMT sterling trimmed its losses only slightly to trade at $1.7556 and 67.22 pence per euro, down 0.95 percent on the day against the single currency.