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"Sterling getting Pounded," is the heading of a new strategy note from Citi, in which analysts warn a sharp decline below 1.10 against the Dollar beckons.

Citi, the world's largest prime broker of foreign exchange, says its technical strategy team is now looking to position for an extension of the long-running decline in the Pound to Dollar exchange rate (GBP/USD), by buying put options.

This is a strategy that delivers a profit when an exchange rate or any other financial asset falls.

"We are buying a 4 month 1.0770 GBPUSD put," says Tom Fitzpatrick, a technical strategist at Citi, in a note seen by Pound Sterling Live.

"The long term GBPUSD chart now truly looks awful," he says, offering a thesis for the trade.

But a fall to 1.0770 could be a relatively conservative forecast, as Fitzpatrick has studied GBP/USD's long term charts and finds "a major double top forming as a continuation that suggests a move to and possibly below parity".

"There is no material support now (outside of the March 2020 spike low just above 1.14 until the major lows posted in 1985 at 1.0520," says Fitzpatrick.

He says a monthly close below 1.1760 will be a bearish outside month as a continuation.

The exchange rate is currently quoted at 1.1816.

Citi economist Ben Nabarro this month caused a storm by predicting UK inflation could be set to storm towards 19%, amidst surging energy prices.

Further negatives that should weigh on the Pound include numerous strikes by disgruntled workers and surging short-end interest rates.

It is meanwhile noted these surging interest rates are no longer supporting the pound, as was the case in the past.

"As a consequence, we think this move can be much more aggressive than markets might suspect," says Fitzpatrick.

However, for the Pound much still hinges on the actions to be taken by the incoming Prime Minister.

Liz Truss is almost certain to replace Boris Johnson and there is media speculation she will bring in an emergency budget as soon as September, to deal with the impact of surging gas prices.

We note here that any steps that ultimately limits the impact on consumers and businesses of energy price rises could crimp the peak in UK inflation.

After all, Citi's end-of-days 19% CPI forecast assumes no additional fiscal measures are taken by the government.

For the Pound, therefore, anything that can nip the inflation surge and restore consumer confidence would be supportive and could ultimately preserve it from any major losses over coming weeks and months.

However, the cost will be huge and risks bloating the UK's debt burden to the extent international investors are less willing to invest in Sterling assets.