The pound last week notched up its biggest weekly fall against the dollar in seven weeks as investors priced in the risk of Britain failing to agree a trade deal with the European Union in the 11 months left of the Brexit transition period.
In early Monday trade, sterling slipped to as low as $1.2873 - the lowest in 2-1/2 months.
It was broadly steady around 84.93 pence per euro.
With no news or data to drive the pound, the currency was taking its cue from broader trends in currency markets, analysts said.
"Market participants are becoming more concerned about economic growth outside the U.S., boosting the relative appeal of the dollar," said Lee Hardman, a currency analyst at MUFG.
"In the UK, recent data points to a pick up in growth which is good for the pound but that is being set of by concern over a trade deal."
Positioning data from the U.S. Commodity Futures Trading Commission released on Friday shows speculators' bullish bets on sterling had moderated further in the week to Feb. 4 but the market continued to hold a net long position.
British economic growth and industrial production data released on Tuesday, could provide the next steer for sterling, analysts said.