The Pound has gone from strength to strength against the troubled Turkish Lira over the past week, and looks set to expand these gains.
The Lira has had a run of bad luck recently, with a major setback in the EU integration process sending TRY demand plummeting.
Pound Lira Exchange Rate Boosted by Hopes of Single Market Assurance
While the Pound was able to advance comfortably against the Lira over the course of the week, it was largely boosted on Thursday.
The source of this widespread investor optimism was Brexit Secretary David Davis, who stated that the UK might be able to pay for single market access after it finally leaves the EU.
This sparked wild demand for Sterling owing to renewed hopes for the UK economy, though as Friday’s trimmed gains showed, mass profit-taking quickly took its toll on GBP’s temporarily inflated value.
Granting further support to the Pound towards the end of the week were the US jobless claims figures, which weakened USD demand on a higher-than-expected figure.
Turkish Lira Dips as Visitor Numbers Fall and EU Integration Frozen
The Lira had a poor run of trading last week, with limited domestic data failing to inspire confidence in the beleaguered Turkish currency.
In terms of ecostats, November’s economic confidence index rose, but annual tourist arrivals in October were shown to have dropped once again due to fears of national instability.
Closing off the week’s announcements, the nation’s manufacturing PMI dropped further into contraction.
The other major damage to the Lira was caused by external factors, namely plans by EU leaders to freeze Turkey’s efforts to become an EU member.
These efforts have been ongoing for years and held back by numerous Turkish failings in required areas, but the idea of putting talks on ice represents a fresh blow to Turkey’s future relationship with the EU and wider world.
GBP/TRY Exchange Rate Forecast
Next week, Pound Sterling/Turkish Lira exchange rate movement may occur as a result of the UK’s November services PMI, as well as national production and trade stats.
For Turkey, key events will include November’s inflation rate data as well as retail sales results for October.
On the UK front, services are set to rise slightly on Monday, while annual industrial and manufacturing figures have increases expected on the year in October.
Friday’s October trade balance has also been forecast positively, with an expected deficit reduction from -5.2bn to -3.4bn on the cards.
Turkey’s November inflation figures, due Monday, are expected to show a rise on the year but drop on the month. On Friday, October retail sales are forecast to print positively on both the year and month.