Sterling fell to $1.242 and €1.166 after reaching a two-month high against the eurozone currency earlier in the week.
Markets sold off the pound amid fears household spending power has been hit by higher inflation.
Annual growth came in at 1.5 per cent, a marked slowdown from 4.1 per cent in December.
Britain's currency fell as markets decided the fall could mean an interest rate hike by the Bank of England has been pushed further into the distance.
It comes after inflation hit its highest level in more than two years last month.
Crucially, wages are still rising faster than the cost of living.
But the Bank of England predicts a weaker pound could push inflation to 2.8 per cent this year, which could further squeeze household spending.
Ruth Gregory, UK economist at Capital Economics, said: "There are still a number of reasons to think that spending growth will slow ahead, rather than grind to a halt.
"For a start, survey evidence suggests that spending off the high street, such as in pubs and restaurants, has remained strong.
"Moreover, interest rates look set to remain low for some time to come, the cost of servicing debt should remain manageable and confidence remains strong by past standards.
"As such, our forecast is for real consumer spending growth of around 1.8 per cent in 2017, down from 2.8 per cent last year."