A number of major banks have started to cut their near-term forecasts for sterling signaling a weakness in the U.K. economy after Britain voted to exit the European Union (EU).
The currency hit its lowest in nearly 31 years in the early hours of Friday after the referendum results were announced that sent shockwaves across all asset classes globally. However, on Monday sterling further fell below the 31-year low to $1.3221 on speculation that the Bank of England may proceed with a rate cut. Sterling is also at its lowest against the euro since March 2014 at 83.41 pence.
"The move in sterling against the dollar after the U.K. referendum is unprecedented," John Bilton, global head of multi-asset strategy at JP Morgan Asset Management told CNBC via email.
"Sterling is 7 percent lower versus the dollar. Previous experiences of currency volatility warn that there could be aftershocks which could reverberate across asset classes. The currency markets are likely to remain the focal point for expression of political risk. We expect sterling to weaken further and see scope for further pressure on the euro."