We have been dealing with this issue and have just decided (only partly due to the window) not to rearrange the bathroom. Our contractor balks at ANY window in the shower/tub area other than a high transom, preferably fixed. But, we did consider just replacing the existing big old window with vinyl and using a plastic curtain (to protect the window, at the contractor's insistence, in addition to privacy), and almost opted for that.

It's become clear to us that views vary a lot about what is acceptable re windows in tub/shower areas. I have looked on line and seen photos of large double-hung windows, without curtains, in such areas.

We had this same issue. We built a shower where a window was. We were told to use a shower curtain to protect it. We decided to make the window smaller and put glass blocks in. The glass block will be up high and offer light and privacy.

My contractor wanted small windows and obscure glass. I have three windows planned, two up high (shower and water closet) transom-like, and one regular by the tub. I plan to put plantation shutters on the one above the tub and more blinds on the other two. My neighbor next door wants to make the wall higher between our homes, so any issue of sightlines directly into my house will be reduced. I have blinds now on my one window in the tub/shower area, the faux wood type, has worked fine. Your contractor may be concerned if the current window is not tempered glass.