"Our view is that the pound is overvalued," says Jason Daw, a senior currency strategist at Merrill Lynch. "We are near the highest level that we have had since 1990, when the pound was up around $1.90. The average rate over the past 16 years has been $1.64, and it's now $1.89."

Merrill Lynch forecasts an exchange rate of $1.75 by the middle of next year, with one euro worth 72p.

Daw argues that, as the UK is running a current account deficit, the pound will suffer because countries with current account deficits have historically seen the value of their currency fall when interest rates are rising in the world's biggest economies - which is now the case in the eurozone and in Japan.

The markets are pricing in one 25 basis point increase in UK interest rates, and a 40 per cent chance of a second increase between now and February. While the expectation of rising rates is bolstering the pound for now, a failure by the Bank of England to raise rates as expected could be the catalyst for the pound to fall.

I hear the argument over the Fed vs. the ECB, but I think the BoE has done quite a respectable job since being granted independence.  It's difficult to argue with almost a decade free of recession.

Where's your motherf*%&ing flag pin?