Analysts at Rabobank see the GBP/USD heading lower in the coming month amid USD strength. They consider the pair may drop to 1.22. 

Key quotes: 

“With the USD on the front foot yesterday, sellers stepped in, technical indicators soured, and cable registered its worst day in 2 months. It is our view that GBP’s gains since early March suggest that a lot of better news regarding UK fundamentals is already baked into the price.”

“Last week’s release of stronger than expected US April labour market data underpinned the stickiness of wages and inflation risks on the other side of the Atlantic. As a result, the market withdrew some of the projected Fed easing that has been anticipated for the end of this year. It is our view that there will be no rate cut from the Fed until next year. We foresee some support for the USD in the coming months as 2023 rate cuts are fully priced out and as the USD picks up some safe haven support from US recession risks. We see scope for GBP/USD to push back to 1.22 on a 3 month view.”

“We expect EUR/GBP to trade mostly around the 0.87-88 area through the summer.”