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– This is the scenario of the CNBC report on CCTV in China, Tuesday, July 30, 2019.
The Sterling Bulls, who are hoping that Boris Johnson's election could raise sterling, will probably feel disappointed recently, because after Boris took office, the pound continued its devaluation and even worsened.
Taking office for just one week, the pound lost more than 1% against the dollar and the euro, at around 1.22 and 1.1. Sterling has now fallen to its lowest level in 28 months against the dollar.
The most immediate reason, of course, is that Johnson's appointment clearly showed the current UK government's tough stance on Brexit, increasing the risk of a tough Brexit. Johnson immediately insists on a Brexit and has recently issued an ultimatum to the EU.
Say unless European leaders renegotiate the terms of the agreement on Brexit concluded by its processor Theresa May, otherwise it will no longer trade with the EU and Britain will leave the EU without agreement. However, the European Commission Juncker also said that the EU would not resume negotiations on a Brexit agreement. The European Union is on the verge of depriving this week five countries, including Canada and Singapore, of access to the EU's financial markets.
It is also perceived as a warning of the European Union against a hard Brexit. The decision has raised fears that if a difficult Brexit occurs, this will threaten London's position as the world's financial city. In fact, foreign direct investment in the United Kingdom has continued to decline since the start of the Brexit process.
Negative growth first occurred in the 1st quarter of this year. The attractiveness of UK investments has fallen to its lowest level in six years.
This has led a number of business groups in the UK to step up their lobbying efforts in the hope that the UK will abandon its Brexit, an unprecedented deal. The deadline to leave the European Union on October 31st is less than 100 days, Under Johnson; the British cabinet has been replaced by radicals, the preparation of Brexit is also considered a priority. In its latest survey, the Confederation of British Industries baderts that neither the EU nor the companies are fully prepared for a tough Brexit, especially the EU.
Despite the efforts of both sides, it is clear that many areas need to be improved, which requires not only large sums of money, but also extensive publicity and education. If it was not prepared, a hard Brexit would directly disrupt economic activity, resulting in delays in ports and a shortage of essential supplies such as drugs.
In this case, the position of the pound sterling as the dominant currency in the world and the title of London as a city of international finance could face serious challenges.
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