Yet history suggests a currency can remain over- or undervalued on these measures for a considerable period of time, at least until a catalyst comes along to trigger a correction.

As so often when making predictions, strong arguments stack up on both sides of the debate. We think the Bank of England will be more active than either the ECB or Fed this year in withdrawing some - and I emphasise ‘some’ - of the unprecedented monetary stimulus which it has applied to the UK economy over the past year. We feel that the latest GDP data underestimates the momentum in the economy since last summer, mindful that estimates can be revised, often years later.

The yield differential between UK and German two-year government bonds has had a fairly good correlation with sterling’s value against the euro recently and we would expect sterling to move higher against the euro this year, though still retain most of its devaluation gains since 2007.

I use the word ‘gains’ advisedly: lower sterling is an important economic safety valve for the UK, something that neither Ireland nor Greece – so keen to join the single currency when it was set up – possess.

On balance, a flexible currency and the recent devaluation will prove to have been a good thing for the UK, in the same way as Black Wednesday in 1992 is now referred to by many as White Wednesday – with one bound, sterling was free.

What might go wrong in our modestly bullish sterling scenario? Politics and the deficit loom large. A downgrade to the UK’s credit rating, perhaps provoked by a hung parliament, would not be sterling supportive. Also, there is always the risk that momentum in the economy slows again and leads the Bank of England to keep policy on hold for the rest of the year, or even extend quantitative easing further.