The Pound Sterling (GBP) to Turkish Lira (TRY) exchange rate briefly rallied to its best level in a week on Wednesday before resuming its downward trend as concerns over the upcoming Scottish referendum continues to weigh upon sentiment.
Traders remain jittery after an opinion poll published on Tuesday showed that support for Scottish Independence increased ahead of the vote due to be held on September 18.
Comments made by Mark Carney also increased concerns over what currency Scotland will use if it does leave the UK. The Bank of England governor ruled out the possibility of a currency union.
The Turkish Lira was able to recover its earlier losses despite data showing that the nation’s economy expanded at its slowest pace in more than year in the second quarter and made a shock contraction from the previous quarter.
According to the Turkish Statistical Institute, the Turkish Gross Domestic Product (GDP) expanded by 2.1% year-on-year. The figure was a fall from the 4.7% expansions recorded in the first quarter and was below economist expectations for an increase of 2.8%.
Quarter on quarter GDP contracted by -0.5%, down from the revised 1.8% figure recorded in the first quarter of the year.
The decline was thought to be because of measures made by the Turkish Central Bank earlier in the year. In January, the bank curbed access to credit and made an emergency interest rate rise in order to slow a run on the Lira.
‘This all boils down to the delayed impact of the central bank’s monetary tightening. There has been a clear weakening in fundamental economic activities compared to the previous quarter,’ said an economist from Yatirim Finansman Securities in an interview with Bloomberg.
The GDP data also showed that export increased by 5.5%, adding to the 11.1% rise seen in the first quarter. In contrast, imports dropped by 4.6%, a decline from the previous quarters rises of 0.7%. Another drag on GDP came from a 3.5% decline in investment; it was the second fall in succession.
Pound Sterling to Turkish Lira Forecast
With all focus being fixed upon Scotland, we can forecast that the Pound is likely to remain weaker until the vote on September 18. If the vote results in a victory for pro independence, we could see Sterling fall even further as the markets will no doubt embark on a round of panic selling of the currency.
UPDATE
The Pound Sterling (GBP) to Turkish Lira (TRY) exchange rate was over 0.15% stronger following the release of a poll revealing that the ‘No’ camp has a 6% lead in the run up to the Scottish referendum.
The poll, conducted by Survation, gave ‘Yes’ voters 47% and ‘No’ voters 53% and undid much of the damage done to the Pound after YouGov’s own survey (published on Sunday) put nationalists in the lead.
GBP/TRY gains were a little limited as Turkey’s current account deficit was shown to have narrowed in July.
The deficit contracted sharply from 4.1 billion Dollars to 2.63 billion Dollars.
With little in the way of Turkish or British economic news on the horizon, the Pound to Turkish Lira exchange rate may continue trending in its present range for the rest of the day.
Current Turkish Lira (TRY) Exchange Rates:
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
, Turkish Lira, 3.5437 ,
Euro,, Turkish Lira, 2.8509 ,
US Dollar,, Turkish Lira,2.2012 ,
[/table]
