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Sterling is at a 17-month low, but has it bottomed?

The U.K. pound hit a fresh 17-month low against the U.S. dollar on Tuesday and currency experts are split on which way the currency will head next.

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New U.K. data on Tuesday from financial services firm Markit showed activity in the services sector hit a 19-month low in December, with the index suffering its biggest decline in more than three years.

This data, tied with weak manufacturing figures on Friday, has seen the pound be one of the worst-performing major currencies this year.

Sterling fell as low as 1.5150 against the U.S. dollar on GMT on Tuesday, a nadir not seen since July 2013. Meanwhile, the euro edged higher to trade as high as 0.7864 against the pound.

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Alex Edwards, the head of the corporate desk at UKForex, forecast sterling could soon break below $1.50 and Marshall Gittler at IronFX also predicted a downward overall path for the pound.

However, some traders and analysts are less convinced.

"It looks like it could be the perfect storm for the pound right now," said Kathleen Brooks, a research director at FOREX.com, in a note on Tuesday. "However...could it be time to turn against the tide of GBP selling?"

Michael Hewson, the chief market analyst at brokerage CMC Markets, said that sterling had not convincingly broken the $1.5240 trend line, while Jane Foley at Rabobank suggested that the U.K. currency could hold around $1.52 for most of 2015.

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Analysts seem unanimous on one point: sterling is being driven by interest rate differentials. A higher domestic interest rate gives a currency a better yield and investors flocked to the pound between mid-2013 and mid-2014 in anticipation of an upcoming rate hike and the possibility of earning more money. However, the Bank of England has had to curtail its plans for a hike as the country's economic recovery has waned in recent months, while the U.S. Federal Reserve continues edging closer to an hike at some point this year.

Disinflationary pressures have clearly picked up in the U.K. economy, said Foley, which means that consumer price growth is expected to wane. She explained that this meant the Bank of England would be in no rush to hike rates.

A downturn in the likelihood of an imminent Fed rate hike could benefit sterling, according to FOREX.com's Brooks. Membership of the Federal Open Market Committee changes at the first regularly scheduled meeting of each year, and a different composition could make for a more dovish Fed, and less chance of a hike in 2015.

"We could see expectations for a U.S. rate hike get pushed back, weighing on 10-year Treasury yields and the dollar," Brooks said in her research note.

Brooks said that this could mean a reversal of fortune for the pound.

The interest rate on benchmark U.S. 10-year Treasurys sank below 2 percent on Tuesday morning for the first time since mid-October; the yield on 10-year U.K. gilts also tightened.

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