eFX reports

In 2015 the GBP has outperformed most currencies as it has retains link to the dollar on expectations the BOE would be the next central bank to begin tightening monetary policy, notes SEB Group.

"However low inflation will delay the first BOE hike and increase divergence between BOE and Fed policy.

They add:

With monetary policy divergence between the BOE and the Fed about to increase just like between the Fed and other major central banks,the close relationship between the greenback and sterling should break down with the GBP becoming attached to and suffering with other currencies against the dollar.

Finally, we believe the GBP will be vulnerable to the UK's plans to hold a referendum on EU membership either next yea r or in 2017, a situation which is likely to create considerable political uncertainty. However, probably the referendum will be held in 2017, which probably makes this more of a long-term story," SEB argues.

"We expect GBP/USD to fall to 1.40 in 2016," SEB projects.

This article is courtesy of our friends at eFX