Sterling will make solid gains on the dollar in the coming year, a Reuters poll found, but that climb is based on the assumption that Britain leaves the European Union next year with a deal.
Median forecasts in the August 31-September 5 poll of 50 foreign exchange specialists put cable at $1.28 in a month, $1.32 in six and $1.37 in year - which would mark around a 6 per cent rise from where it was trading on Wednesday.
But that still won't be where it was before the June 2016 referendum and those forecasts were weaker than ones given just a month ago, highlighting market doubts as a deadline approaches for when the two sides want to have thrashed out a deal.
"Our high conviction view remains that a deal will be reached ... we think this will take GBP/USD back above the $1.30 level and towards $1.35," said Kamal Sharma at Bank of America Merrill Lynch.
But the pound will instead fall 8 per cent in the immediate aftermath if Britain leaves the EU without a deal in March 2019, the median forecast from an extra question suggested. The most pessimistic response was for a 15 per cent slide.
"If the negotiations should collapse, or if the agreement is rejected by some EU country or by the UK Parliament − causing the UK to leave the EU without an agreement next year − there is a risk that the pound will depreciate dramatically, especially against the dollar," analysts at SEB told clients.
Still, a separate Reuters poll earlier this week gave only a one-in-four chance of a no-deal Brexit - despite there being less than two months before the UK and EU are hoping to agree on the terms of Britain's departure with the two sides still looking a long way apart.
"The risks to our forecasts are tilted to the downside," said Valentin Marinov at CA-CIB, who has already revised down his forecasts.
"While our central case remains that the EU and the UK will eventually arrive at a mutually beneficial and business-friendly trade deal, chances are this will come only after a period of heightened political uncertainty and growing fears about a no-deal Brexit."
The uncertainty was also reflected in the range of forecasts, between $1.20 and $1.41 in six months time - around when Brexit is due to happen - and $1.2258 to $1.51 in a year.
Soon after Brexit happens, the Bank of England is expected to raise its Bank Rate by 25 basis points to 1 per cent, offering some support to the pound, but then hold off on any further moves until 2020.
The United States Federal Reserve has been steadily raising borrowing costs since late 2015, which alongside investors seeking safety in US assets on concerns over the impact of trade tariffs, has lent support to the dollar.
So with those factors already priced in, any further dollar rise is expected to be limited.
Against the common currency, the pound will move little, which has been the case for a long while. In a month, one euro will get you 90.0 pence, in six months 89.0 pence and in a year 88.0 pence, not far from the 89.6p it was at on Wednesday.
The European Central Bank, which plans to end its €2.6 trillion stimulus programme this year, is expected to raise its interest rates in the quarter after the BoE does.
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