Election 2017: Minority government 'may support sterling'
The likelihood of a minority Conservative government could stave off a further fall in sterling when trading begins on Monday, according to analysts.
Prime Minister Theresa May is in talks with the Democratic Unionist Party to support her administration.
The Tories lost their Commons majority in Thursday's general election.
Societe Generale strategist Kit Juckes said: "You may well see the pound bounce on the optimism ... but it will be short-lived."
David Madden of CMC Markets said Mrs May staying on as prime minister with help from the DUP may assist sterling "a little".
The pound's fall against both the dollar and euro was less dramatic than the drop in the wake of the EU referendum in June last year.
The chances of Mrs May securing a "hard" Brexit have diminished following the loss of the Conservatives' Commons majority, according to some commentators.
George Osborne, the former chancellor, told the BBC he did not believe that most MPs now backed a "hard" Brexit" following the election result.
Panmure Gordon market commentator David Buik said the hung parliament would "require an immediate response to settle for a much softer Brexit".
Former Business Secretary Sir Vince Cable, who is returning to the Commons after regaining Twickenham in southwest London for the Liberal Democrats, said "the whole Brexit approach will have to be rethought".
The DUP campaigned for Brexit, but wants a common travel area between the UK and Ireland and no hard border with the Republic - the UK's only land border with the EU.