During the build-up to the June Turkish general election, the Lira has been trending lower amid political uncertainty. Even a succession of relatively positive domestic data wasn’t enough to sustain a significant Turkish Lira appreciation.
Over the past month, the Pound Sterling to Turkish Lira (GBP/TRY) exchange rate has been trending within the range of 3.9866 – 4.2235.
The Lira advanced recently after the Central Bank of Turkey (TCMB) kept the lending rate on hold. The Turkish asset climbed the most among emerging-market currencies, boosting the Lira’s appeal to investors seeking high-yielding assets. However, ongoing political uncertainty is weighing on investor confidence, which has seen the Lira drop versus many of its currency rivals and made domestic data less impactful than it would ordinarily be.
Over the coming month, June’s general election will dominate trader focus. Recent attacks on Turkey’s pro-Kurdish party have only amplified election jitters. With June 7
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rapidly approaching, the four main parties have ramped up their election rallies in a last ditch effort to win a majority. Polls thus far have given an edge to the ruling Justice and Development Party (AKP) which has eased fears of a significant policy overhaul. Should the AKP maintain power, domestic data is likely to be far more impactful.
However, the attacks on the pro-Kurdish Peoples’ Democratic Party (HDP) could be very significant to the outcome of the election if they inspire additional votes from sympathetic citizens. Should HDP gain 10% or greater of the national threshold, there is a high potential it will rob the AKP of substantial majority votes and therefore the opportunity to rule alone.
Domestic data over the coming month will be of interest to those trading with the Turkish Lira. Of most significance will be growth data due for publication on June 10
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. On the year, first-quarter Gross Domestic Product is forecast to advance by 1.13%; a figure down from the previous year’s first quarter growth of 2.6%. The quarterly GDP is expected to decline by -0.83%.
In addition to the growth data already mentioned; Business Confidence, Capacity Utilization, Tourist Arrivals, Balance of Trade, HSBC Manufacturing PMI, Producer Prices Index, Inflation Rate, Industrial Production, Retail Sales, Current Account, Unemployment Rate, Consumer Confidence and Central Government Debt will all be of interest to those invested in the Lira.
Towards the end of the coming month the Turkish central bank will be making its first interest rate decision following the general election.