The past few days have seen some extreme movements in the Pound Lira exchange rate, with the weekend bringing political turmoil in Turkey which affected the value of its currency dramatically.
Meanwhile, the UK’s currency has gotten off to a shaky start this week. While the Pound was boosted on Monday, it has since fallen by the wayside due to mounting concerns about the future of the national economy in a post-‘Brexit’ world.
Over the course of the past week the GBP/TRY exchange rate has shifted between 0.2628 and 0.2496.
Pound Rocked by Shifting Chances of BoE Interest Rate Cut
The latest movements for the Pound have been mixed, with the start of the week seeing the Pound rise considerably against virtually all peers bar the Lira. This major uptrend was caused by comments from the Bank of England’s (BoE) Martin Weale, who essentially contradicted Friday’s extremely dovish comments from fellow BoE official Andy Haldane.
While Haldane was all for cutting the UK interest rate at the start of August, Weale took a more measured approach and implied that a near-term rate cut would not necessarily be a certainty.
Since then, however, the Pound has dropped off considerably, partly due to excessive profit-taking and partly on the realisation that Weale is just one of nine policymakers, which means that a rate cut may actually still be on the table.
Turkish Lira makes Dramatic Movements on Attempted Coup and Aftermath
The Lira has been through the mill lately against the Pound and most of its other peers.
While a sizable drop off was seen on Friday night, Monday saw the Turkish currency soar due to the rapid resolution of the weekend’s astonishing events.
In a fast-moving series of attacks, an attempt to take control of the country was made by a rogue faction of the Turkish Army, which was quickly thwarted and put down by the remaining forces that stayed loyal to the government.
While much of the Turkish media has fallen under control of the government, reports coming out of the turbulent nation have spoken of harsh reprisals against those suspected of being involved in the coup.
Thousands have been arrested and while some believe that the nation’s presidency is justified in breaking the back of the rebellion, others see the apparently brutal treatment of prisoners as a sign of consolidated power and increased authoritarianism in the country’s halls of governance.
The latest news has concerned the death penalty in Turkey; this legislation was abolished completely in 2004, though Recep President Erdogan has stated that ‘if the people demand it’, he will endeavour to bring it back; this measure would set Turkey back considerably in its long-running efforts to become a member of the European Union.
In less dramatic news, the Turkish unemployment rate for April fell from 10.1% to 9.3% on Friday and on Tuesday, the Central Bank of the Republic of Turkey (TCMB) left the interest rate at 7.5% but cut the overnight lending rate from 9% to 8.75%.
GBP TRY Exchange Rate Forecast
For the rest of the current week, Pound Sterling/Turkish Lira exchange rate movement may occur as a result of tomorrow’s UK jobs data along with the Turkish debt results and confidence score, as well as Thursday’s UK retail sales stats and Friday’s UK PMI printings.
For the UK tomorrow morning, claims in June are expected to rise while the unemployment rate is forecast to stay put at 5%. Average earnings excluding bonuses are expected to fall from 2.3% to 2.2%.
For Turkey’s ecostats, consumer confidence is expected to rise, while central government debt has a decline in store.
UK retail sales have been forecast pessimistically while all of Friday’s composite, manufacturing and services PMI flashes are expected to fall into contraction.