Political risks will likely be the key theme for sterling (CME:Index and Options Market: ZBP*) 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 (Exchange: GBPEUR=) after the European Central Bank kick-started its massive easing program. However, it is down 4.7 percent against the greenback (Exchange: GBP=) 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:
More From CNBC