Pound to Turkish Lira (GBP/TRY) Exchange Rate Rebounds as Lira Sees Broad Weakness

Pound to Turkish Lira Exchange Rate seeing Modest Gains despite Brexit Fears

The Pound (GBP) is recovering slightly this morning, but the Pound to Turkish Lira (GBP/TRY) exchange rate remains low despite the Turkish Lira’s (TRY) own broad weakness. Investors are buying Sterling ahead of a key Brexit vote.

No-deal Brexit fears were the main news last week, with GBP/TRY spending the week plunging. GBP/TRY opened the week at the interbank level of 9.88, but spent the entire week lower.

GBP/TRY ultimately closed the week at the level of 9.56. GBP/TRY also touched on a low of 9.52 on Friday, the pair’s worst level in half a month.

At the time of writing on Monday, GBP/TRY is attempting to rebound slightly, trending at the level of 9.63.

The Turkish Lira’s outlook remains filled with uncertainties as well. As a result, the Pound to Lira exchange rate may recover more easily than other Pound pairs.

Pound (GBP) Exchange Rates Attempt to Steady Higher with Brexit in Focus

Last week saw the Pound plummet across the board. No-deal Brexit fears returned and throttled the Pound. It came as markets feared the UK government would undermine Brexit negotiations with a concerning rewrite of the Brexit withdrawal agreement.

Sterling is recovering slightly from its weekend lows today. The British currency is being boosted slightly by the broad backlash against the government’s plan, even from within the Conservative Party.

Still, analysts remain concerned about the Pound’s outlook overall, with no-deal Brexit fears high. According to Lee Hardman, Currency Analyst at MUFG:

‘There is still downside risk from here if the situation continues to deteriorate,’

Turkish Lira (TRY) Exchange Rates Remain Under Pressure after Huge Losses

The Turkish Lira (TRY) hasn’t been entirely appealing lately either. Last week saw the currency slump as investors looked for safer assets.

As coronavirus second wave fears and Brexit fears intensified, investors sought out safe havens. The Turkish Lira is often correlated with demand for risk and emerging market currencies, so it tumbled.

Against the US Dollar (USD), the Turkish Lira hit its worst levels on record.

Turkey’s concerning inflation outlook weighed on the currency as well. On top of that, credit rating agency Moody’s downgraded the nation’s credit rating to B2.

According to a statement from Moody’s:

‘At the moment, political pressures and limited central bank independence, a slow reaction function of the monetary authorities, and a lack of predictability in their reaction function increases the probability of a disorderly exchange rate and economic adjustment,’ 

Pound to Turkish Lira (GBP/TRY) Exchange Rate Keeps Brexit in Focus

Amid a lack of notable Turkish data due in the coming week, the Pound to Turkish Lira (GBP/TRY) exchange rate will likely continue to be influenced by political developments.

Brexit developments remain particularly influential. Today, UK MPs are expected to debate and vote on the UK government’s controversial withdrawal agreement rewrite.

If the bill is defeated or the UK government softens its position, the Pound to Turkush Lira exchange rate could strengthen its recovery. Any optimistic Brexit news could send GBP/TRY surging due to the Lira’s own weakness.

Markets remain hesitant to take risks as the global coronavirus second wave worsens. On top of this, Turkey’s domestic outlook remains filled with pressure.

Upcoming UK data in the coming days, including job market and inflation stata, could also influence the Pound to Turkish Lira (GBP/TRY) exchange rate.

Josh Jeffery

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