Pound Sterling (GBP) is "Biggest con game in town, and it’s working!" Says Exchange Rate Forecast Note from BMO Capital

• At the time of writing we see the pound to dollar exchange rate (GBP/USD) trading 0.12 pct up on a day-to-day basis at 1.7086.
• The pound to euro exchange rate (GBP/EUR) is seen trading 0.15 pct higher at 1.2692.
• The pound to Canadian dollar (GBP/CAD) is meanwhile 0.07 pct down at 1.8319.

(Note: If you are hoping for a better exchange rate then don't hesitate and don't leave it to chance, ensure your currency provider has the relevant stop-losses in place. Furthermore, by using an independent provider you could be able to execute your currency needs at rates that can be up to 5% more beneficial than the rates offered by your bank.)

Is the current valuation of the British pound a con? Yes suggest analysts

Sell the pound dollar rate warn analysts at BMO Capital who in a quarterly exchange rate forecast note have described current advances in the GBP as a con.

Indeed, analysts reckon that anyone tempted to buy the GBP/USD rate in anticipation of further rallies is merely engaging in a 'risk-on' trade.

Part of the reason for the suggestion is the clear correlation between the rise in the pound dollar and the S&P 500.

There is however scope for further GBP advances, but the time to bet on a decline is coming:

• We foresee more GBP strength, but the 1.7300-1.7500 range is a sell; UK conditions are only superficially good
• Inflows’ are not very strong, but they will pick up without ‘macro pru tightening’: GBP strength bad for the C/A
• Gap between CPI and house price inflation suggests disequilibria, service sector dependent on housing
• BoP balance on income: earnings on non-resident assets in Britain weak as well as Britain’s earnings abroad
• Foreign investment and earnings on assets in the UK are dominated by portfolio securities, not FDI

British pound continues to hit fresh highs

Whether the strength in the GBP is reflective of a con or not, we can be sure that at present it enjoys positive trend momentum patterns.

Sterling set fresh five-and-a-half year highs against the US dollar and a new 22-month high against the euro earlier in the week as inflation data exceeded expectations to come in at 1.9%, just below the 2% target set by the Bank of England (BoE).

"A high level of inflation is likely to put pressure on the BoE to raise interest rates sooner rather than later, and speculative investors rushed to support sterling on the back of this data," says Carl Hasty at Smart Currency Business.

Mixed labour data from the UK saw a positive fall in unemployment to 6.5% – the lowest since 2008; however, a sharp drop in wage growth saw sterling lose ground against the euro and US dollar at it may force the Bank of England (BoE) to push back the expected rate hike until later in the year.

No major data is set to be released from the UK today, however as news continues to break surrounding the Malaysian jet and Gaza strip, we could see significant movement in the market.

If you are looking to buy or sell sterling, we suggest contacting your trader now for live rates, news and currency-purchasing strategies.