Traders were uncertain what caused the sudden gyration in the currency on Friday, but some attributed the move to reports of French President François Hollande urging the European Union to take a tough line on negotiations with the U.K. as it prepared to formally begin the exit process from the EU.
"Investors may have thought that negotiations are going to be easy, but today's flash crash has shown where the support [level for the pound] is and the reality is this that it won't be long before we may touch the low again," said Naeem Aslam, chief market analyst at ThinkMarkets, in a note.
Analysts at Singapore's DBS Bank said in a morning note on Friday that markets were bracing for more volatility from Brexit uncertainties, following signals from Germany and France on tough negotiations with the U.K. as well as Prime Minister Theresa May's criticisms of the ultra-loose monetary policy set by the Bank of England.
"Any lawyer can tell you that divorces tend to be messy, complicated, emotional and loud," the DBS analysts said.
Though the pound recovered from the early lows, some strategists believed the currency faced a bumpy ride ahead.
Foreign exchange strategists at Australia's Macquarie Bank wrote in a note to clients that while Cable may recover to the $1.25 mark later in the global day, "all technical support has now been obliterated, so sterling is doomed from here over the months ahead."
"Bargain-hunting by foreigners will help slow the path lower, but we should not over-estimate the impact of U.K. property purchases and inbound M&A activity," the strategists said.
The bid yield on the 10-year Gilt climbed as high as 0.967 percent in Asian afternoon hours, up from its previous closing level at 0.873 percent. The bid yield on the 30-year Gilt reached as high as 1.687 percent, up from its last close at 1.594 percent. Bond prices move inversely to yields.
Elsewhere, the dollar index, which measures the greenback against a basket of currencies, climbed to 97.080, from levels below 95.600 earlier in the week. The dollar's strength sent other major currency pairs lower.
The Japanese yen was weaker against the dollar, which was fetching 103.88 yen, compared with levels below 101.00 yen in the previous week. The Australian dollar traded at $0.7566, falling from levels near $0.7660 reached earlier in the week.
The off-shore yuan, which is more freely traded, weakened against the dollar, trading at 6.7141, compared with levels near 6.68 in the previous week. The onshore market was closed for the Golden Week public holidays.
Beginning this month, the Chinese currency was included in the International Monetary Fund's (IMF) Special Drawing Right (SDR) basket and was given a weight of 10.92 percent in the basket, compared with the dollar's 41.73 percent weight and the yen's 8.33 percent.