Political risks will likely be the key theme for sterling in the days ahead as the countdown to the U.K.'s general election in May begins.
Thus far in 2015, the pound has been caught in the middle of monetary-policy shifts in Europe and the U.S. Year-to-date, the U.K. currency is up 5.5 percent against the euro after the European Central Bank kick-started its massive easing program. However, it is down 4.7 percent against the greenback amid expectations that the Federal Reserve will raise rates mid-year.
"As we move closer towards election day, markets will be focusing a lot on the political risk. Comments from the Bank of England will likely cease as of now as the central bank has a close-door policy during election campaigns," said David Greene, head of dealing at AFEX Australia, who has a "hold" rating on cable for the short term.
Meanwhile, RBC Capital Markets says the pound will likely be a "net loser" no matter how the election pans out.
According to Reuters, recent opinion polls suggest a hung parliament after the vote, in which no single party can form a government on its own, creating possible political uncertainty.
As such, tell us how you are placing your bets on the sterling: