Sterling lost ground to a firmer dollar on Tuesday and also ticked lower against the euro as investors awaited Bank of England minutes and growth data due this week for more clues on the outlook for UK interest rates. In the absence of major British data on Tuesday, sterling tracked the euro and other high yielding currencies down against the dollar, which rallied after strong US consumer confidence data.
"High yielders in general have probably struggled a bit today," said Tim Fox, market strategist at National Australia Bank.
"It looks as if there has been a bit of profit-taking on high yield currencies."
At 1630 GMT sterling traded down three quarters of a percent at $1.8646. It was also slightly weaker against the euro at 69.51 pence.
Analysts said sterling came under pressure on expectations for capital outflows from the UK after Britain's Bradford & Bingley said it would buy up to 1.4 billion pounds of mortgage portfolios from GMAC-RFC in the United States.
"There's been one thing where Bradford and Bingley are buying something and so people believe there's going to be a net dollar purchase there. That's one of the reason's why cable might be lower today," said Neil Parker, market strategist at the Royal Bank of Scotland.