The Pound has been a stable bet against the Turkish Lira for most of the last month, with the pairing moving from 3.9966 to 4.1362.
The Turkish Lira has been less fortunate than the Pound, having been devalued by the impact of declining tourism on small businesses.
Pound Sterling Unsettled by Latest GDP Slide
Although GBP has been on a general uptrend, the Pound has been more unsettled this week as one of the most high-impact UK economic announcements of the week showed a notable decline in first quarter GDP on the quarter. Although the annual outcome remained at 2.1% against forecasts of a drop, the quarterly slide from 0.6% to 0.4% did little to enthuse investors.
An analysis of the results showed that while the service sector was healthily heating up ahead of summer, virtually all other sectors faltered.
‘Leave’ Campaign Speaks Out for ‘Brexit’
The latest development in the ongoing UK Referendum campaign has come from the ‘Leave’ camp and may have actually caused the Pound to appreciate against its peers.
This has been the analysis from 8 notable economists that a 4% GDP rise could be in store if the UK leaves the EU. Although naturally subject to scrutiny, the announcement has at least presented something of a positive picture of what the UK’s future could be like under a ‘Leave’ victory.
Lira Soft on Mounting Economic Impact of Political Tensions
The Turkish Lira has been lacking appeal lately owing to the ongoing political turbulence that comes from the nation being the buffer zone between Europe and the Middle East.
Although business confidence in April rose from 106 points to 110.1, the Lira has been more negatively affected by a -12.8% drop in tourist arrivals on the year in March. This figure peaked in around July 2015 and has been progressively worsening ever since.
In addition to the migration crisis increasing tension among investors inside and outside of Turkey, continued terror attacks and a clampdown on trade and travel from Russia, as well as new pressures on Turkish trade from Armenia, have all combined to weaken the Lira considerably over recent months.
Future GBP/TRY Exchange Rate Forecast
Looking ahead, Pound Sterling/Turkish Lira exchange rate movement this week may occur as a result of tomorrow’s negatively-predicted UK Gfk consumer confidence survey for April, as well as Turkey’s March trade data and Q1 tourism revenues results.
In Turkey’s case, the trade deficit is expected to widen while tourism revenues are expected to narrow from a previous 6.57bn to 1.1bn.
In the coming week, the UK will contribute April manufacturing and construction PMIs on Tuesday and Wednesday, while Thursday will bring the outcome of the services variant. Also of note on Thursday are a wide range of elections, covering the Scottish Parliament and the London Mayoral Position, among others.
Turkish announcements include Monday’s April manufacturing PMI, Tuesday’s inflation result for the same month and Friday’s treasury cash balance.
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