Relief at TCMB Rate Decision Prompts GBP/TRY Exchange Rate to Dip
The Pound to Turkish Lira (GBP/TRY) exchange rate is trading lower today as Turkey’s central bank voted to leave its monetary policy unchanged.
At the time of writing GBP/TRY has tumbled 0.56% from today’s opening levels, but still retains most of its gains for the week.
Turkish Lira (TRY) Lifted by TCMB Rate Decision
After plummeting at the start of the week the Turkish Lira found some support today following the Central Bank of the Republic of Turkey’s (TCMB) first rate decision of the year.
In a move widely predicted by markets, the bank voted today to leave interest rates on hold at 8%.
Despite Turkey’s economy showing robust growth in recent months the TCMB concluded that rates would likely remain on hold until there was a notable improvement in the inflation outlook.
A statement from the bank read:
‘The tight stance in monetary policy will be maintained decisively until inflation outlook displays a significant improvement, independent of base effects and temporary factors.’
The TCMB has faced considerable pressure from President Tayyip Erdogan in recent months to lower interest rates, with the President calling for cheaper credit to stimulate the economy.
However it may be Erdogan’s destabilising impact on the Lira that may eventually prompt a response from the TCMB, with the currency’s continued depreciation likely forcing the bank to lower interest rates.
Pound (GBP) Subdued as Markets Await UK-French Summit
At the same time the Pound is a little subdued this morning with few economic or political developments to drive movement in the currency.
Nevertheless, Sterling could see some movement later today as Prime Minister Theresa May meets with French President Emmanuel Macron at the Sandhurst Military Academy in Berkshire.
The primary reason for Macron’s visit to the UK today will be to discuss the border at Calais, with Macron pushing for the UK to do more to tackle the influx of migrants to the town.
However the leaders are also likely to discuss the current state of Brexit negotiations, with Sterling sentiment possibly sliding if Macron appears unwilling to bend on concessions to the UK.
GBP/TRY Exchange Rate Forecast: UK Retail Sales Slump in December?
Looking ahead the GBP/TRY exchange rate may retreat on Friday as the UK publishes its latest retail sales figures.
Economists forecast that the data will show that sales growth fell sharply from 1.1% to -0.6% last month, with Black Friday sales in November having detracted from December’s Christmas sales.
Meanwhile the Turkish Lira may begin to slide again in the coming days if President Recep Tayyip Erdogan ratchets up his rhetoric over making a possible strike again Kurdish fighters in Syria as he risks escalating tensions with the US, a NATO ally.