GBP/USD is set to slide to 1.50 by mid-year, BBH says, as the combination of loose monetary policy and fiscal austerity reduces the appeal of sterling against non-European currencies and offsets safe-haven demand for gilts.

Near-term short-covering has seen sterling recover to $1.5600, Brown Brothers Harriman says, ahead of Wednesday's release of 4Q GDP data and MPC minutes.

But the policy mix points to weakness in the coming months. "On the whole, we expect that both releases to show a weak economic backdrop and further bias in favor of more QE in February after the second round of gilt purchases are completed this month," it says.