I remain bearish on the UK economy, and the pound. See this Times article for a good summary of the challenges facing the UK, including a record current account deficit of 5.7%.
So if I'm shorting the pound, what do I get long? Still like the US Dollar on a RELATIVE basis to the pound, but just now I am going for some Australian Dollars, as interest rates there are 6.75% and apparently on their way to 7%. Nice carry trade. It just requires commodities to hold up...whilst I'm generally long-term bearish on commodities, partly as I think prices are high on speculation, and partly because a global slowdown/recession will reduce demand and hence prices, I will express my bearish views in that sector separately (currently I am short Oil).
5 Year Chart of GBP/AUD
In terms of the past price action, the pound has not moved very much for a few years against the Aussie, I guess partly as both have been used as carry trades. With the Bank of England set to reduce rates further, I think the pound's role as a carry currency will fade, so we could see a nice breakout to the downside here.
I've sold about £110,000 worth of pounds for Aussie...I actually sold the June '08 contract at 2.2702 in equivalent of £500 per big figure, although I'll have to record the spot price in the spreadsheet as I can't get forward prices from Yahoo Finance. Spot was trading at 2.2558 at the time.
In terms of carry, it's worth about 3 points a year to me (eg. If spot is ~ 2.26, 1 year forward is approximately 2.29).