Can GBP/TRY Advance on Faster Pace of UK Wage Growth?
The Pound (GBP) has been trading at all-time high against the Turkish Lira (TRY) today, advancing by 7.2% to trade at a level of 8.7967.
This strong performance could improve on Tuesday, in the event that UK wage growth data shows an acceleration in June’s pace of earnings growth.
Economists aren’t 100% behind faster UK wage growth being reported, but if the readings do rise as some expect then the Pound could firm against the Lira.
In addition to suggesting a more robust UK economy, accelerating wage growth could also lead to increased UK retail activity which would boost services sector performance.
Tuesday will also bring June’s UK unemployment rate reading – this might limit GBP/TRY exchange rate gains if it reveals a rising jobless rate during the month.
Future Pound Sterling to Turkish Lira Forecast: Will UK Retail Sales Stats Drag GBP/TRY Exchange Rate Down?
Looking to later on this week, the Pound’s (GBP) advances against the Turkish Lira (TRY) could be limited on Thursday if UK retail sales data disappoints.
Readings out during the morning are tipped to show slowing activity for the year-on-year reading that excludes fuel sales.
The ‘fuel-less’ readings are considered more accurate than the all-inclusive figures, so this result could lower confidence among GBP traders and cause slight GBP/TRY losses.
Turkish Lira to Pound (TRY/GBP) Exchange Rate Outlook: Can the Lira Recover on TCMB Crackdown?
The Turkish Lira (TRY) has been in the headlines recently for all the wrong reasons, having nosedived against peers like the Pound (GBP) because of economic unrest.
Among other issues, TRY traders are worried that the Turkish central bank (TCMB) is no longer independent, based on the actions of President Recep Tayyip Erdogan.
This week’s Lira movement will likely be determined by any emergency measures put in place by the TCMB.
The TCMB has already attempted to contain Turkey’s economic meltdown by boosting liquidity for national banks, but Lira traders are looking for more decisive measures.
Among other things, an immediate and significant rise in Turkish interest rates could serve as a short-term remedy to the present Lira weakness.
If it looks like the Turkish central bank can’t implement emergency measures, however, then the Lira could fall even further against the Pound.
Looking at dangers that Turkey faces in the future, University of St Gallen economist Reto Foellmi says:
‘The vibrant growth of Turkey relied heavily on financing in foreign-currency debt. While Turkish exports get cheaper, Turkish companies face higher repayment obligations of the loans which hurts banks as well.
‘As the Lira has a reputation as a weak currency, [President] Erdogan’s rhetoric puts oil into the fire.
‘With a further weakening of the Lira, Turkey faces a downward spiral, where default could be the end.’