It is definitely more efficient to counterfeit larger denominations but you also have to measure the relative difficulties and chance of getting caught.

The old £1 Coin was relatively easy and cheap to counterfeit and the counterfeits were practically perfect (I've had a few over the years, they're REALLY hard to spot unless you know what you're looking for, just Google "spot a fake £1" for some examples of how good they are).

Seems like many of the counterfeit coins come from abroad, in particular countries with a much lower cost of living and where counterfeiting foreign currency may be ignored. There's also a huge market in pushing counterfeit money onto foreign exchanges in other countries.

Unlike large notes with security features, no one really checks £1 coins for authenticity. You can spend them all over the place with very low risk (especially if you can get anything useful from vending machines – buy a train ticket at a major station, for instance, and it'd be essentially risk-free).

1 in 30 pound coins is fake. If you have a handful of smash and examine the pound coins you can usually find at least 1 fake one. Counterfeiters made millions before anyone caught on