The Office for National Statistics said that manufacturing output fell 0.3 percent - the biggest drop since March and compared with analysts' forecasts of a rise of 0.3 percent. That left output 0.8 percent less than a year earlier.
"Some of sterling's weakness is due to the weaker than expected data, but most of this is due to broad-based dollar strength," AIB Group economist Geraldine Concagh said.
By 1458 GMT, sterling was down half a percent against the dollar at $1.7411, having hit $1.7390 earlier, its lowest since October 12.
The dollar rallied across the board on Monday, hitting an 18-month high against the euro and a 26-month peak against the yen.
Against the euro, the pound traded at 67.67 pence, down around a quarter percent on the day.
Industrial production was also weaker than expected, rising by just 0.5 percent instead of the 0.8 percent predicted by analysts.