Brexit negative for the Euro as well

The countdown to the Brexit vote on June 23 would be bad for UK growth and is likely to keep investor confidence subdued. The impact is not just limited to the UK, negative growth implications would be felt across the rest of Europe, and more importantly could cause wider political uncertainty.

Any signs of loss of confidence in the Euro Area would attract response from the ECB and that in turn, is negative for the Euro. EUR/USD is trading just above psychological support at 1.10 and above the bottom of the uptrend of the last few months around 1.0950. Break of 1.10 is likely to see an acceleration downwards.

"We remain bearish, of GBP/NOK, GBP/JPY, and GBP/USD for that matter. There will be corrections as move gets stretched but they'll be chances to sell, at least until June 22." said Societe Generale in a report.

"The GBP weakened too much, too far. No Brexit is our baseline, and while volatility will remain elevated until the June referendum, there is a substantial risk for a relief rally afterwards as the BoE is repriced. Worst case, Brexit may be worse news for EUR than for the GBP..." said Nordea Research.