Sterling has spiked further against the dollar and other currencies after strong retail sales and minutes of the latest Monetary Policy Committee meeting stirred up the rate hike debate.
Sterling has risen above $1.69 against the US dollar during trading, nearing its highest level for five years following the release of strong manufacturing data for April.
Sterling has climbed to a four-year high against the dollar after the UK's jobless rate, one of the triggers for an interest rate rise, was breached.
Andrew Cole, investment director at Barings, has warned sterling "could get ugly" during the next six months, ahead of the 2015 general election, but said it remains the best of a bad bunch for now.
Scottish first minister Alex Salmond has accused the three main UK parties of "bluff, bluster and bullying" after they rejected plans to share the pound with an independent Scotland.