The past week has seen the Pound Sterling to Turkish Lira (GBP/TRY) exchange rate gradually decline, having peaked advantageously at 4.3229 and ended on a low note of 4.1973.
Last week, the Pound’s value was initially raised by a competent response from Bank of England (BoE) Governor Mark Carney at a meeting with the Treasury Select Committee. However, by the end of the week, Sterling had crumbled on the news that PM David Cameron had rejected the ‘Emergency Brake’ system proposed during the lengthy UK Referendum negotiations.
UK Manufacturing Pulls Through Today as Referendum Deadline Nears
The Pound has opened on a strong note this week, having been put in this position by the morning’s UK Manufacturing PMI for January. Instead of declining from 52.1 to 51.6 as predicted, the printing actually showed an advance to 52.9.
While the fact that UK Exports fell marred an otherwise outstanding result, the day has nonetheless been characterised by highly positive Sterling movement against most peers, including the Lira.
In an ongoing situation, the PM has been given 24 hours by European Council President Donald Tusk to submit a list of draft renegotiation terms; failure to meet this deadline is unlikely to prevent the referendum (eventually) taking place, but the PM can expect his credibility to take a hit as he, in all probability, misses the end of February deadline for locking the referendum conditions in place.
Turkish Lira Softened by Detrimental Trade Stats Last Week, Mfg This Week
While events in the UK prevented the Pound rising against the Lira last week, the Turkish currency was nonetheless weakened overall by China’s stock markets hitting a great deal of turbulence and Turkey’s trade deficit widening from -4.24bn to -6.18bn on Friday.
Today, the Lira has been primarily harmed by its own domestic data, which has been a decline from 52.2 to 50.9 for the January Manufacturing result. Additionally, China’s repeated contraction of its own Manufacturing industry in January has added to global market instability and lessened the Lira’s appeal.
This Week’s GBP/TRY Exchange Rate Forecast
For the present week, Pound Sterling/Turkish Lira exchange rate movement may occur as a result of tomorrow’s UK January Construction PMI, Wednesday’s Turkish Inflation Rate and UK Composite and Service PMIs and Thursday’s BoE Interest Rate Decision and Inflation Report.
At the time of writing, expectations were for a minor decrease in the Construction score from 57.8 to 57.5, a rise in Turkish Inflation from 8.81% to 9.3% and slight losses in both the Composite and more-impactful Services figures.
Thursday is unlikely to be a good one for investors in the UK currency, as the BoE Monetary Policy Committee (MPC) is highly unlikely to raise the UK interest rate and the Inflation Report has a high probability of being dovish in nature.
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