The pound had already been under pressure as investors' optimism for a Brexit trade deal has declined ahead of the ruling Conservative party's annual conference next week.
The pound, trading at around $1.3065, dropped to as low as $1.3035, before steadying at $1.3057, down 0.2 percent on the day.
Sterling was 0.1 percent stronger against a broadly weaker euro at 88.950 pence.
British companies cut their investment in the second quarter of 2018, with Britain's exit from the EU less than a year away, and the country's balance of payments shortfall grew more than expected, data showed.
The Office for National Statistics confirmed a previous estimate that Britain's overall economy grew by a quarterly 0.4 percent in the April-June period but lowered the annual growth rate in the second quarter to 1.2 percent from a previous estimate of 1.3 percent.
A Reuters poll of economists had forecast year-on-year growth of 1.3 percent and quarter-on-quarter growth of 0.4 percent.
Previous batches of data such as retail sales had pointed to an economy that performed relatively well in the third-quarter, helped by unusually warm weather and British consumers spending more.
CONSERVATIVE CONFERENCE
The Conservative Party holds its annual conference next week, and the focus is on whether Prime Minister May can win over critics of her Brexit proposals.
May had warned last Friday that Brexit negotiations with Brussels had come to an impasse, inflicting on the pound its biggest one-day loss since 2016. The focus has now shifted to the domestic front as May seeks to overcome divisions within her party over strategy to leave the EU in March.
"We expect the pound to decline to $1.24 in three months and $1.20 in six months as Brexit approaches but a deal remains elusive," said Stephen Gallo, European Head of FX strategy at BMO Financial Group.
"We expect an eventual 'soft Brexit' agreement... but we think the odds of a 'cliff edge Brexit' will increase measurably before a withdrawal agreement takes shape," he said.
Gallo expected the pound to rebound to $1.29 in nine months and $1.41 in 12 months.