After it emerged that bookmakers are overwhelmingly in favour of the UK voting to remain in the European Union, high-yielding emerging-market assets advanced. With the UK’s vote just hours away, the GBP TRY exchange rate held losses amid growing trader confidence that the UK will vote ‘Remain’.
Turkish Lira (TRY) Exchange Rates Bolstered by Resumption of Israeli Diplomatic Relations
Over the past few days, renewed optimism that the UK will vote to remain in the European Union has bolstered risk-appetite exponentially. As a risk-correlated currency, the Turkish Lira advanced versus a number of its major peers.
If the UK does indeed vote ‘Remain’, the Lira could extend gains with traders confident now that uncertainty is no longer dominating market movement. However, a ‘Leave’ victory would paint a very different picture. The volatility in the FX market and the surge in demand for safe-haven assets would significantly dampen the appeal of the Lira.
Aside from the Brexit vote, the Turkish Lira also found support versus many of its peers amid optimism of improved diplomatic relations between Turkey and Israel. This weekend will see several Turkish and Israeli delegations join to resume their diplomatic relations initiated in 2010. The talks were cut short previously following an Israeli attack on Mavi Marmara.
If the talks are positive, the trade agreement deal between the US, Turkey and Israel agreed in April can finally be put into action. This is likely to be highly supportive of demand for the Lira.
Pound Sterling (GBP) Exchange Rates Cool from Intraday Highs on Demand for Travel Money
Confidence that the UK will vote to stay in the EU caused GBP exchange rates to climb over the past few days. Whilst the Pound continues to hold a comparatively high trade weighting, Sterling cooled from intraday highs during Thursday’s European session as British citizens race to exchange money ahead of the Brexit vote.
The massive influx of citizens exchanging money at the post office and in the bureau de change suggests that Brits aren’t as confident as traders that the outcome of the referendum will be a ‘Remain’ victory.
Bookies have been in favour of ‘Remain’ which has much more favourable odds, and several companies have stated that the majority of bets made have been for the UK to stay in the EU. However, there is evidence to suggest that the majority of ‘In’ votes have been made online and the majority of ‘Out’ on shop floors.
If younger voters adopt their own stereotype and don’t bother to vote, the lead for ‘Leave’ could be far more commanding than bookies and opinion polls suggest. Many analysts believe that the youth vote will be the deciding factor.
Over the past seven days the Pound Sterling to Turkish Lira (GBP TRY) exchange rate was trending within the range of 4.1418 to 4.2885.