The last time the British pound was worth $2 US dollars was in 1992 when the beleaguered Conservative Government of the day imposed successive interest rate rises in a futile attempt to keep the UK in the European Exchange Rate Mechanism (ERM). The result, as everyone knows, was ‘Black Wednesday’ and the pound was forced out of the Exchange Rate Mechanism.

A strong pound stateside traditionally means that difficult economic conditions lay ahead, as they did in 1992 and before that in 1981. So, do the latest increases mean that a recession could be on the way?

In December, when Sterling first touched the $2 mark Ted Scott, fund manager of the F&C Stewardship and the F&C UK Growth & Income funds, warned that a strong pound could cause problems to the economy. (Read more: Mixed Benefits to Strong Pound Stateside).

“A strong sterling will strengthen the headwinds for the UK economy as UK exporters take a direct hit and consumer spending, the main driver of the UK economy, will come under further pressure,” he said.

Michael Gordon, chief investment officer of Fidelity International also believes that on the surface, there are some parallels between the past and the current situation.

“UK inflation rose to 3.1% in March this year and although it has fallen back to around 2.5% it is still above the Government’s 2% target – and it is clearly a concern for the Bank of England,” he said.

“But there appears very little chance of recession in the UK this year or next. Inflation is much lower than in the 1970s or late 1980s when it was out of control. The price of oil, a significant driver of inflation, has fallen since last summer. Crude has fallen from $79 a barrel in August 2006 to around $71 today, and lower fuel costs have started to filter through to consumers.”

Interestingly, Gordon points out that whereas in previous decades the strong pound had a negative effect on Britain’s manufacturing industries - which relied heavily on exporting their goods - today manufacturing only accounts for only 14% of GDP, compared with around 40% 50 years ago.

In addition, China is expected to remain a deflationary force in the global economy for some time yet, having amassed excess capacity in a range of industries from steel to automobiles. (Read more: China to be World's Largest Economy by 2010).