Pound Turkish Lira (GBP/TRY) Exchange Rate Edges Up as Irish PM Welcomes Brexit Plans
The Pound Sterling Turkish Lira (GBP/TRY) exchange rate rose and the pairing is currently trading at around ₺7.0695, up 0.6%.
Sterling rose on Thursday as Prime Minister Boris Johnson said he has made a ‘genuine attempt to bridge the chasm’.
He argued that his plan which would see Northern Ireland stay in the European single market, but leave the customs union, and this was a ‘compromise’.
However, Irish Prime Minister Leo Varadkar said that while the new plans were welcome, they ‘fall short in a number of aspects’.
Added to this, the European Commission said the plan contained ‘problematic points’ and ‘further work is needed’.
Speaking in parliament, Boris Johnson said:
‘This government has moved, our proposals do represent a compromise and I hope that the House can now come together in the national interest, behind this new deal.
‘I believe this is our chance and their chance to get a deal.’
Turkish Lira (TRY) Falls as Inflation Edges Down to Three-Year Low
Data revealed that Turkish inflation fell to the lowest level in nearly three years in September thanks to a more stable Lira and weak demand after recession.
Figures from the Turkish Statistical Institute showed that consumer prices slowed to 9.26% after a 15.01% increase in August.
Monthly inflation was also below forecast, coming in at 0.99%.
Commenting on today’s data, Finance and Treasury Minister, Berat Albayrak stated:
‘We have made a remarkable progress in the fight against inflation.
‘This was a significant gain made after the currency attack in August. Our new target is to bring inflation down to 5% while preserving those gains. We will spread out achievements in the current account and inflation to all other fields in the economy.’
However, the sharp slowdown in inflation could cause further confrontation with Turkish President Recep Tayyip Erdogan after a new central banker hinted there was limited room for further monetary easing.
Commenting on this, Bloomberg economist, Ziad Daoud said:
‘Inflation decelerated sharply not because the central bank had slashed rates as the president might claim, but due to strong base effects linked to the Lira. The currency effect will slow price growth further in October before turning inflationary later this year, limiting the central bank’s room to ease policy.’
Pound (GBP) Rises despite Dominant Service Sector Plummeting to Three-Year Low
Sterling rose against the Turkish Lira despite data revealing the UK economy has likely slipped into a recession in the third quarter.
As firms brace for the possibility of a chaotic Brexit at the end of the month, Markit showed that the dominant services sector slipped into contraction.
The services sector suffered its largest decline in employment in over nine years and business expectations weakened to the lowest level since July 2016.
This morning also showed that all three sectors (manufacturing, construction, and services) registered lower output in September.
Last month also saw the first broad-based decline since April 2009, which saw the chance of the UK entering a recession in the third quarter increase.
Commenting on this morning’s data, Duncan Brock, Group Director at the Chartered Institute of Procurement and Supply noted:
‘Momentum and optimism were in woefully short supply in September after many months of persistent uncertainty in 2019 pushed the index below the no-change mark. Deferred client orders and reduced consumer spending as a result of Brexit uncertainty and a slowing global economy meant hard-pressed businesses started to lose their battle against the hardest conditions for about a decade.
‘An exhausted sector’s optimism faded away to July 2016 levels and new export orders fell at the fastest rate since March. Some respondents mentioned overseas customers were putting spending decisions on hold or choosing other European suppliers instead. In this last month before the Brexit deadline, there is little time or vision for a major turnaround in fortunes before the end of the year.’
Pound Turkish Lira Outlook: Will Brexit Pessimism Weigh on GBP?
Looking ahead, Brexit is likely to remain one of the main catalysts for movement in Pound Sterling (GBP) exchange rates.
If parliament rejects Boris Johnson’s new Brexit plans, it is likely the Pound Turkish Lira (GBP/TRY) exchange rate will fall.