Pound Sterling to Turkish Lira (GBP/TRY) Exchange Rate Dips despite Wounded TRY Hitting Historic Lows

Weak Lira Continues its Long Descent as Sanctions are Imposed and Inflation Soars

The Pound (GBP) has dipped against the Turkish Lira (TRY) today, although for context the GBP/TRY exchange rate is still trading at a high level of 6.62 on the interbank rate.

The Turkish Lira is experiencing extreme weakness at present, with historic lows being recorded against the US Dollar (USD), which has gained 34.5% against the beleaguered Turkish currency on the year so far.

The reasons for the dramatic plunge are ongoing political fears and a backdrop of skyrocketing inflation.

Risk of Future BoE Rate Cut Causes GBP/TRY Exchange Rate Trembles on No-Deal Brexit Fears

The latest remarks on Brexit from Bank of England (BoE) Governor Mark Carney have caused today’s GBP/TRY exchange rate dip.

Adding to comments made on Thursday in which he warned that a bad Brexit deal could lead to a BoE interest rate cut, Mr Carney said:

‘I think the possibility of a no-deal [Brexit] is uncomfortably high at this moment.

‘Our responsibility in the other half of the bank – our job is to look at what could go wrong and what we could do to make sure that the Bank is in a robust position so it lessens the impact of a no deal Brexit.

‘A no-deal Brexit is highly undesirable.’

GBP/TRY Advance Limited by UK Services PMI Slowdown

Other UK economic news has had a similarly negative effect on the Pound Sterling to Turkish Lira (GBP/TRY) exchange rate – this has been July’s UK services sector PMI.

The reading disappointed GBP traders by showing a larger-than-expected decline in services sector activity with a shift from 55.1 points to 53.5.

Summarising this disappointing development, IHS Markit Associate Director Tim Moore said:

‘The service sector moved back into the slow lane in July as business activity growth lost momentum for the first time since the start of spring.

‘A general slowdown in new business growth … appears to have offset the boost to tourism-related activity from the extended dry period in July.’

Turkish Lira to Pound Sterling (TRY/GBP) Exchange Rate Gains Limited by US Sanctions

Although the Turkish Lira (TRY) has ticked higher against the Pound (GBP) today, any Lira gains are significantly limited because of recent political developments.

The United States has imposed economic sanctions on two Turkish government ministers, in response to the detainment of an American preacher living in Turkey.

The sanctioning of two ministers is a relatively minor development in itself, but Lira traders are worried that this could escalate into punishing nationwide sanctions against Turkey.

Pound Sterling to Turkish Lira (GBP/TRY) Exchange Rate Rise Forecast on UK GDP Growth

The Pound (GBP) has a chance to advance against the Turkish Lira (TRY) in the week ahead, when UK GDP growth rate stats come out on Friday.

These initial estimates are expected to show an acceleration of UK economic growth during Q2 2018, which could lead to GBP/TRY exchange rate gains.

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Adam Solomon

Adam joined the team at TorFX soon after graduating from University in 2005 with a degree in Journalism. Since then Adam has advanced to become both Head of Trading and Head of Treasury. His keen interest in the currency market and knowledge of what drives exchange rates makes him perfectly positioned to produce regular market updates focused on the movements of the major currencies.

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