The British pound has regained some momentum since hitting its year-to-date trough in January, but its upswing appears tenuous, with some bearish analysts predicting more downside risk than upside for the U.K. unit.

While sterling GBPUSD, -0.71% has declined by 14.5% against the dollar since the U.K. voted to exit from the European Union, known as Brexit, back in June 2016, the currency has gained 3.7% against the dollar so far this year. It last traded at $1.2807, compared with its early 2017 lows of $1.20, which it hit at the start of the year and approached again in March.

Similarly, a strengthening in the U.S. dollar, which has been modestly ticking up for much of this month on the back of U.S.-specific dynamics such as stronger retail sales, also adds weakness in the pound, said Peter Ng, senior FX trader at Silicon Valley Bank.

Still, lengthy and intense Brexit negotiations create a lot of uncertainty for the pound and the British economy, presenting a downside risk that is tough to quantify, analysts said.

“Sterling is one of the only G-7 currencies that’s vulnerable to underperform the dollar,” Mazen Issa, senior FX strategist at TD Securities said. “It could break through the $1.26-$1.265 level in the coming weeks.”

Economic data are fueling the thesis, with mixed statistics painting an uneven picture of British economic health in the wake of severing ties with Europe’s trade bloc. That uncertainty may diminish expectations of an interest-rate hike by the Bank of England, analysts said.

The BoE gave market participants mixed signals in its last minutes, released earlier this month, in which it slashed its GDP forecast for 2017 and 2018, but also stated that interest rates could increase faster than expected, leaving investors confused.

Today’s data dump included a flat second reading of second-quarter gross domestic product at 1.7%, in line with expectations, but also lower business investments in the same period.

”I’m not even sure how to read the data coming out of the U.K. anymore,” SVB’s Ng said about the uncertain conditions, adding that even if data disappoints, the weak pound is beneficial to British multinational companies. The FTSE 100 XX:UKX, for example, has risen 3.4% in the year to date, begging the question whether a stronger pound would depress levels.

So far, the foreign-exchange market preferred the narrative of the “hard” Brexit that British Prime Minister Theresa May promised when she first took office because it was synonymous with a weaker pound, Stephen Gallo, European Head of FX Strategy at BMO, wrote in a note on Wednesday.

But over the past months, May’s government’s stance on how hard or soft a Brexit should be has become muddled. On Tuesday, May conceded that EU laws will continue to influence Britain even after Brexit is concluded — whenever that may be. The negotiations are meant to last two years, but as this is uncharted territory, surprises could be waiting around every turn. For example, it is not entirely clear how friendly an agreement the existing European Union members would let the U.K. get away with. If they played hardball it could leave Britain with unfavorable trade agreements and a lot of red tape. At present, the U.K. is in the process of publishing position papers on various Brexit-related issues, including goods and services and data sharing.

Should the U.K. be able to bridge its philosophical differences with the European Union and move toward a transitional agreement with the continent, the pound could experience some upside, market participants said.

“It’s also difficult to be pound positive because of the bullish euro,” Luke Bartholomew, an investment manager at Aberdeen Standard Investments, said.