— This is the script of CNBC's news report for China's CCTV on July 16, 2019, Tuesday.
The pound has been weakening since Britain began the process of leaving the European Union. The pound has been the worst performing of the world's 32 major currencies over the past three months, according to currency tracking data.
The pound has been falling against the dollar, the euro and other major currencies. The pound is currently trading around $1.25 against the dollar and around $1.11 against the euro, both of which are at their lowest levels in the last six months. Seeing from the five-day chart, the pound rebounded slightly against the dollar at the end of last week. This is mainly because, under the expectation of interest rate cut by the Federal Reserve, the depreciation pressure of the dollar increases, leading to a disguised appreciation of sterling. However, after a brief recovery, the pound quickly slipped back into negative territory, showing the downward pressure.
The main reason for the sustained weakness of the pound is the political turmoil caused by the Brexit and the uncertainty caused by it, which have weakened investors' confidence in the pound.
Amid this uncertainty, the British economy has not provided enough support for the pound. While the UK economy has had a good start to the year, there have been frequent negative signals in the second quarter, with several recent economic data, including manufacturing activity in June, worrying markets.
With the economy under downward pressure, one of sterling's limited supports -- the bank of England -- has also dimmed its chances of raising interest rates.
We know that Bank of England governor Carney has been trying to raise interest rates to preserve sterling's position as a strong currency around the world, but the recent weakness in Britain's domestic economy, combined with the Fed and ECB, has hinted at further easing, that leaves Carney to change his words, saying the Bank of England will do more to help the economy if needed. That is to say, he is open to more monetary stimulus.
Political risks in the UK have intensified after Prime Minister Theresa May announced her resignation
Boris Johnson is now the front-runner for prime minister. His election would raise the risk of Britain leaving the EU without a deal, potentially putting further devaluation pressure on the pound.
The results of the conservative vote, which is expected to be announced on July 23, are also a reminder to investors to watch closely. As for the weakening pound, I think it is the British who are most worried, we know Britons usually take holiday in July and Aug, in the past, many Britons would choose this time to travel to other countries.
But the weakening pound is forcing Britons to look elsewhere this summer; tourism figures show that Turkey has become a popular tourist destination for many Britons.
The Turkish lira has also fallen sharply this year, allowing Britons to make the most of their sterling and not suffer too much from falling exchange rates. In the current situation, it is also a smart choice.