The pound slid against its major rivals on Tuesday (22 November), after a report showed Britain's public finances remained on shaky ground just a day before the Autumn Statement.
Having climbed above $1.25 in the first session of the week, sterling touched daily lows of $1.2423 against the US dollar and €1.1687 and, by early afternoon, it was down 0.46% against the dollar to $1.2438 and 0.25% lower against the euro, trading at €1.1719.
"The sharp appreciation in sterling feels unsustainable with bears exploiting this opportunity to drag prices lower," said FXTM research analyst Lukman Otunuga.
"It seems sterling has been tainted by the Brexit woes with any appreciation achieved seen as another ticket for bears to drag prices even lower."
Data released by the Office for National Statistics showed public sector net borrowing, excluding public sector banks, fell more than expected last month, declining £1.6bn ($2bn) to £4.8bn. In the financial year-to-date, public sector net borrowing declined 10.3% year-on-year to £48.6bn, hitting the lowest level for the first seven months of a tax year since 2008, but the government remains unlikely to meet its fiscal target for the current financial year.
Meanwhile, a survey of 430 businesses released by the Confederation of Business Industry (CBI) showed manufacturers expect to increase average selling prices over the next three months at the fastest pace since January 2014, in the wake of the pound's sharp decline since the Brexit vote.
"The weak pound is beginning to make its mark, and prices are expected to rise, especially in the food and drink sector," said CBI's chief economist Rain Newton-Smith.
Elsewhere, the dollar struggled for direction, as investors analysed Donald Trump's overnight comments on the Trans Pacific Partnership (TPP) agreement, after the US president-elect said the US will leave the TPP deal during his first 100 days in office.
The greenback was down 0.24% and 0.14% higher against the euro and the yen respectively, fetching 0.9422 euro cents and ¥110.98, and gained 0.21% against the Swiss franc to CHF1.0109.
However, the US currency was flat against its Canadian counterpart and lost 0.18% against the Australian dollar, exchanging hands at AUD$1.3533.
Craig Erlam, senior market analyst at Oanda, said the dollar's slight decline was attributable to traders wanting to secure profits.
"Having hit 13 and a half year highs and with markets now having almost entirely priced in a hike next month, we're now seeing a little profit taking in the dollar which is helping to support commodities, which typically benefit when the greenback weakens," he added.