It’s the final day of debate for the Article 50 bill currently being scrutinised by Parliament, which is curbing Pound Lira exchange rate gains. GBP TRY is currently trading around 4.67.
Article 50 Bill Debate Keeps Appetite for Sterling Soft
The Pound is on soft form today, managing to eke out only minor gains versus the Lira. Today is the final day that MPs will debate the bill to authorise the government to trigger Article 50. There are more amendments to be voted on, but some of the key issues, such as a greater say for the devolved governments, have already been rejected.
As it seems more-and-more likely that Theresa May will be granted carte blanche with regards to the exit negotiations, the Pound is weakening.
Sterling has been further harmed by the revelation that the vote MPs will be given on the final Brexit deal would not force Theresa May to return to the negotiating table. MPs had been promised that they would get a final say on the exit deal, which was assumed to mean a veto would see the Prime Minister attempt to secure better terms.
However, it has been confirmed that if MPs reject the deal, then the UK will simply leave the EU with nothing in place and fall back on World Trade Organisation (WTO) rules.
While this is causing GBP TRY to fluctuate, the Pound is currently up 0.2%.
Turkish Lira Slumps after Domestic Data Disappoints
The GBP TRY exchange rate has been aided higher by domestic data from Turkey today, all of which came in below forecast.
Industrial production was expected to accelerate in December from 2.7% to 3%, but instead slowed to 1.3%.
Retail sales declined -0.8% on the month. Predictions had been for a slowdown from the previous rate of 0.5%, but growth of 0.1% was still anticipated. Meanwhile, the decline in year-on-year retail sales was expected to slow from -2% to -0.4%, but instead worsened to -2.7%.
News of strengthening co-operation between Turkey and the United Arab Emirates has helped prevent further TRY losses, however. The UAE is a major trading partner for Turkey, so news that officials from the two nations have agreed to strengthen cooperation in areas including banking, finance, investment, trade and SMEs has helped the Lira resist further depreciation.
More Central Banker Speeches Could Boost GBP TRY Exchange Rates
There is no Turkish data set for release over the coming days, leaving UK developments largely in control of GBP TRY exchange rate movement.
This afternoon sees a speech from Jon Cunliffe, the BoE Deputy Director. If he were to exhibit the same view on recent data as Kristin Forbes, this would boost the odds of a near-term rate hike and likely send GBP TRY trending bullishly higher.
However, BoE Governor Mark Carney is set to speak tomorrow. His comments will come after the close of the London session, but could weigh on the markets on Friday morning. Carney has been fairly dovish in recent press conferences on the pace of inflation, suggesting the chief policymaker won’t be exhibiting much hawkishness.
Friday sees a slew of UK data that could create significant volatility for GBP TRY. The docket opens with trade figures, industrial production, manufacturing production and construction output data. The NIESR January GDP estimate rounds off the day’s releases.