The U.K.'s pound roared higher late on Thursday evening as Mark Carney, the governor of the Bank of England (BoE), surprised markets by hinting that interest rates in the country could begin to move higher earlier than expected.
And with sterling trading close to the $1.70 level, a near 5-year high, on Friday morning, currency strategists are almost unanimous in expecting downward pressure in the near term.
"(It) looks hard to sustain," Geoffrey Yu, a forex strategist at UBS told CNBC via email on Friday. Kit Juckes, global head of foreign exchange strategy at Societe Generale agreed, writing in a research note that this level for sterling is "pretty much the top" and will be "sorely tested." HSBC's David Bloom hasn't changed his long-term view on the currency, suggesting that the U.K.'s poor fundamentals and current account deficit would see sterling crumble in the medium term.
But there was one contrarian call, Eimear Daly, the head of market analysis at Monex Europe, told CNBC via email that "the only way is up for the pound" with the Bank of England emerging as the first leading central bank to hike rates.
"We are expecting sterling-dollar to break $1.70 during the summer," she said.
As Carney addressed an audience at the annual Mansion House speech in London on Thursday evening, it took just one simple sentence to send market participants into frantic buying. Upstaging the U.K.'s finance minister who had his own important issues to address, Carney said that there's already great speculation about the exact timing of the first rate hike in the U.K. and that this decision is becoming more balanced.
"It could happen sooner than markets currently expect," he said, sending sterling to $1.6883 from $1.6833 in a matter of seconds.