The British Pound's ride higher is a flight of fancy argue a number of institutional analysts.

The Pound jumped against a host of currencies following PM May's keynote speech on her Government’s intended negotiating stance ahead of Brexit negotiations.

But, big-name foreign exchange researchers remain largely unconvinced by the British Pound’s ability to sustain recent gains over coming months.

“The Brexit debate has entered a new round. The Supreme Court verdict is expected on Tuesday. But even if the court were to decide that parliament has to approve Brexit, only the timing of Brexit will be delayed (if at all). After May's speech, all indications are that negotiations with the EU will turn out to be difficult,” says Markus Koch at Commerzbank.

The speech has been widely welcomed by European leaders, and importantly the UK public.

55% of the public approved of May’s stance according to a recent poll on the matter.

However, even here there is concern over whether the desires can be delivered with a majority believing May’s deal is not necessarily the sort of arrangement that other EU countries will agree to, or the sort that May will end up bringing back from Brussels.

By 47% to 38% the public do say they have confidence in Theresa May to negotiate the sort of deal she described, but they do not expect the other member states of the EU to agree to them.

Only 20% of people think that the EU will agree to the Brexit deal she wants, 56% think they will not.

“Consequently, we are sceptical regarding the latest steep rise in the Pound,” says Koch.

Peter Dixon, Chief Economist at Commerzbank says we may have to wait until Article 50 is triggered before we get more insight into the EU's position - which will be crucial to the Pound's fortunes over coming months.

"In poker terms, the EU holds a far stronger hand," says Dixon. "However, they do say that the test of a good card player is that they can win with a weak hand. The skills of the UK government will be put to the test in this regard over the coming months. It will clearly not get all that it asks for, but preventing a disorderly Brexit without seriously damaging the UK economy would go down as a good result."

Koch is meanwhile interested in how the UK economy performs going forward.

It is Commerzbank's position that some slowdown is inevitable, and once the first negative effects become apparent – on the back of foreign companies reducing UK investment or weaker economic data, for example – the Pound will quickly be back under pressure against the Euro.

Commerzbank forecast the EUR/GBP exchange rate to be at 0.86 by mid-2017 ahead of a rise to 0.87 by September where it should stay through year-end and into the first quarter of 2018.

From a GBP to EUR perspective this equates to 1.1628, 1.1494.

Near-Term Strength

"We expect Brexit news flow to slow in 2017, leading to a reduction in short GBP exposure and a rise in the currency," says Sam Lynton-Brown at BNP Paribas.

BNP Paribas believe the GBP is significantly undershooting their valuation model’s fair value under various Brexit scenarios.

"May sounding more conciliatory, positive and assured in her tone regarding negotiations. The fact that she acknowledged that single market access is incompatible with the UK’s double aim of extricating itself from European Court of Justice jurisdiction and regaining more control over immigration provides clarity. Finally, the fact that she reiterated that the government will aim for a transitional deal is a positive development for the GBP," says Lynton-Brown.

Natixis - the French investment bank - say they also see near-term strength.

But, while there is the chance that Sterling will continue rising near-term, the longer-term picture remains unconstructive.

“This speech does not attenuate political and, especially, economic uncertainties. On the contrary, as the UK is set for protracted negotiations to secure trade agreements with the European Union, its main trading partner,” says Nordine Naam at Natixis.

Natixis maintain a stance that the Pound should be sold on strength.