Sterling climbed away from nearly 20 months of decline on Wednesday after the UK prime minister promised to fight an imminent challenge to its leadership.
"I'm not sure that the uncertainty can be much higher than it already is, and we are watching the swings today, the sterile market is trying to balance between two extreme results," said Ronan Carr, global asset manager at Bank of America Merrill Lynch, on CNBC's "Squawk Box Europe" on Wednesday.
Carr said that a possible outcome of political tourism would be Britain leaves the EU without an agreement next March, which he said could lead sterling to fall so low $ 1.10 against the greenback.
At the other end of the spectrum, despite almost three years of debate on the conditions for Britain's departure from blocks, it is still possible that the entire Brexit process be reversed. In this scenario, Carr Sterling could increase to $ 1.50 against the dollar.
"It really turns on these extreme results," he added.