The UK government is on the brink of triggering Article 50 that would mean the start of official divorce proceedings between Britain and the European Union.
While sterling is trading half a percent higher against the dollar after Scottish First Minister Nicola Sturgeon called for a fresh referendum, a number of forex analysts believe the currency could see some near-term weakness.
"While we expect near term GBP negativity, note the macro-economic challenges ahead are tough, we would assume that both the Treasury and the BoE are now too optimistic upon growth we do not necessarily expect aggressive fresh sterling extremes, this comes as the market has already discounted most of the bad macro-economic news," Jeremy Stretch, head of G10 fx strategy at CIBC, told CNBC via email.
Stretch further explained that for euro/sterling the question is how pragmatic or otherwise will the EU eventually prove to be.
"A dogmatic politically inspired response to Brexit would boost discussion of mutually assured destruction. If we assume that Europe avoids a near-term political meltdown that will boost the sterling against the euro, but we do not assume forecasts in excess of 0.90, even if the ECB look to row back on stimulative monetary policy into the third or fourth quarter."