The pound was down 5.2 cents to $1.486, its largest one day fall in percentage terms since sterling crashed out of the Exchange Rate Mechanism (ERM) in 1992.
Sharp falls in the FTSE 100 index - down 5.2% on Monday - also served to undermine the currency.
The pound was also down 3.5 cents against the euro, at 0.851 pounds.
The poor economic data increases the likelihood that the Bank of England will cut interest rates on Thursday.
HSBC confirmed on Monday it is cutting 500 jobs across the UK, while carmaker Aston Martin announced it will cut 300 full-time and 300 temporary jobs.
Mortgage approvals also fell in October, according to figures released by the Bank of England, suggesting house prices may fall even further.
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