sterling

Foreigner investors have been selling UK gilts at a faster rate than at the peak of the financial crisis in 2009, ahead of an unpredictable general election.

The Bank of England's Monetary Policy Committee has warned ongoing sterling strength could prompt a prolonged period of lower inflation expectations.

Key drivers for 2015

Another bruising year for investors?

The UK's current account deficit widened faster than expected in the third quarter to reach a record high of £27bn.

Managers have been grappling with the strong pound this year, as UK companies with overseas earnings have been hindered by currency strength. But that headwind will turn in to a tailwind in 2015, OMGI's Stephen Message predicts.

With currency moves increasingly dominating financial headlines, Tilney Bestinvest's CIO has predicted hedging, not asset allocation, will be the key differentiator for investor returns next year.

Barings multi-asset manager Christopher Mahon has warned the chances of a fresh Black Monday-style crash are rising, as policy decisions increasingly drive markets.

Jupiter UK equity manager Steve Davies believes investors will need to be "tactically nimble" to handle the fallout from next year's UK election.

Sterling could fall much further against the US dollar if the UK's current account deficit is not addressed, bond managers have said.