In the view of UOB Group FX strategists Lee Sue Ann and Quek Ser Leang, a further drop in the pound could revisit the 1.2400 region in the coming weeks.
24 hour outlook: “The pound’s sharp drop to a low of 1.2459 came as a surprise (we had expected it to consolidate). Although the rapid decline is deeply oversold, pound weakness could extend below 1.2450 before stabilization likely. The main support at 1.2405 is unlikely to come into the picture. Resistance is at 1.2510, followed by 1.2540″.
Next 1-3 weeks: “Yesterday (June 01, pair at 1.2610) we highlighted that the bullish momentum had more or less dissipated and we expected it to consolidate and trade between 1.2530 and 1.2670. We did not expect the strong selling that took the pound to a low of 1.2459 . The rapid improvement in bearish momentum suggests likely to weaken towards 1.2405. At this point in time, the chance of a sustained decline below this level is not high. To the upside, breaking through the ‘strong resistance’ level, currently at 1.2570, would indicate that the pound is unwilling to go down.”
Source: Fx Street
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