Britain's pound sterling, which has replaced the Argentine peso as the world's weakest leading currency this year, will continue its downward journey and is expected to touch parity against US dollar in the next two months.

Sterling witnessed a third week of declines following the UK's exit vote from the European Union and won the title of 2016's worst performer among major currencies.

The British currency is now the weakest of 31 leading currencies in 2016, falling by almost 13 per cent against the US dollar. So this is further than the Argentine and Mexican pesos, the Chinese yuan and the Polish zloty.

Sterling fell below $1.30 for the first time since 1985 after the Brexit vote on June 23. The currency had rebounded slightly to trade at $1.29 against the dollar by the end of the week. Analysts predict Sterling will fall further in the short term. The pound has been crashing and burning ever since the Brexit vote results were announced. The long-, medium- and short-term charts of the pound versus all other major currencies look as ugly as hell.

"We believe that this deterioration is just going to continue for the foreseeable future therefore it is a no-brainer that the pound should be aggressively sold on any meaningful bounce going forward especially versus gold," IQI chief economist Shan Saeed told Khaleej Times.

Sterling would hit parity against US dollar by September-November 2016, Saeed predicted.

Sanjay Uppal, chief executive officer of StraitsBridge Advisors, said: "The results of the Brexit referendum went contrary to the polls conducted just ahead of the voting and caught the markets by surprise. Market players and policy makers have since been grappling with uncertainties ranging from whether the Brexit will indeed happen to what this means to future of both the United Kingdom and the European Union."

Uppal, a former chief financial officer of Dubai's Emirates NBD, added: "In the near term, I expect this to take toll on sterling against the US dollar as investors flee in view of the uncertainties. This will however be offset by market players capturing buying opportunities on sterling dips. The current fluctuation will thus continue, possibly with a further downward pressure on the sterling over the next six to 12 months."

However, in the long term, he expects the sterling will bounce back. The extent and pace of this rebound will depend on the UK's policy decisions taken to address uncertainties resulting from Brexit, terms of exit negotiations with EU, and steps taken to strengthen investor confidence and macroeconomic indicators, he said.

Goldman Sachs has said the pound could go as low as $1.20 against the dollar in the next three months, levels not seen since the summer of 1985.

Bank of England warnings were behind the slide below $1.30 last Tuesday and that further central bank announcements about interest rates and could see the pound weaken further, according to Goldman Sachs analysts.

Credit Suisse has also revised its three-month forecast from $1.58 to $1.22 for sterling. "We believe the UK economy's well-documented fiscal and current account deficits, combined with the fact that the pound is not especially cheap, leave room for still more pound weakness," a Credit Suisse analyst said.

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