GBP/TRY Exchange Rate Rises as Theresa May Survives Last Night’s No-Confidence Vote and CBRT Keeps Rates on Hold at 24%
The Pound Sterling Turkish Lira (GBP/TRY) exchange rate is up around 0.6% today, and is currently trading at ₺6.8029 after British Prime Minister Theresa May successfully maintained her position as Prime Minister yesterday after Tory MPs called for a vote of no-confidence.
Winning the no-confidence vote by a majority of 63% support for her continuation as Prime Minister – with 37% voting against her position – the Pound (GBP) has strengthened against TRY.
Some GBP investors, however, have remained cautious as May now has to struggle to gain support for her Brexit withdrawal agreement in a generally hostile Parliamentary, with the likelihood of the EU renegotiating crucial aspects of the deal expected to be slim.
The Turkish Lira (TRY) meanwhile has been facing further volatility, with the Turkish President Tayyip Erdogan calling for individual investors to convert their foreign currency and gold holdings into TRY in an attempt to bolster the strength of the Turkish currency.
Berat Albayrak, Turkey’s Finance Minister, commented:
‘In recent years, volatility has caused serious concerns for local investors. Investments have shifted to deposits. We need to mobilise those investors, those balance sheets.’
Pound to Turkish Lira (GBP/TRY) Exchange Rate Up as Market Attention Shifts back to Brexit
GBP investors have had their attention redirected towards Theresa May who is back in Brussels today to renegotiate aspects of her Brexit withdrawal agreement with the EU, most notably details over the Northern Irish backstop.
Liam Fox, the UK’s Trade Secretary, commented:
‘If there is no movement on the backstop then it is very likely either one of two things happens. Either [we] remain in the EU without a referendum, which I think would be a democratic affront which brings a whole range of consequences, or, perhaps more likely, we have to up our preparations for no deal and leave the EU without an agreed deal.’
Many Sterling traders will be remaining cautious, with the Conservative’s recent vote of no-confidence signifying a deeply divided party, further decreasing the likelihood of May’s Brexit deal passing through Parliament.
The Pound’s (GBP) gains may have been trimmed by today’s release of the November RICS housing price balance which came in at -11% against September’s -10%.
TRY/GBP Exchange Rate Tumbles as CBRT Announces no Change to Interest Rates
Today saw the release of the Central Bank of the Republic of Turkey’s (CBRT) interest rate decision, with the bank opting to keep rates static at 24%.
Jason Turvey, an economist at Capital Economics, commented:
‘The effects of August’s currency crisis caused Turkey’s economy to contract in Q3 and more timely evidence suggests that the downturn deepened in Q4.’
TRY volatility was further exacerbated last week by the CBRT’s decision to stick to a 5% inflation target despite interest rates hitting a 15-year high in October.
Next week will see the release of Turkey’s budget balance for November.
GBP/TRY Outlook: Theresa May’s Brexit Deal Remains in Focus
The Pound Turkish Lira (GBP/TRY) exchange rate will likely be driven by political factors in the coming week, with Theresa May winning yesterday’s no-confidence seeing her rallying to gain support for her Brexit withdrawal agreement under increased pressure.
Brexiteer Conservative MP Mark Francois commented on last night’s vote, saying that the 117 votes of ‘no-confidence’ against Theresa May was ‘far more than anyone was predicting’, further commenting:
‘I think that will be very sobering for the Prime Minister. I think she needs to think very carefully about what she does now.’
Looking ahead to next week, Monday will see the release of the UK’s Rightmove house price index for December, with investors paying close attention to any signs of changes.
Thursday will see a slew of important UK data events, the most notable being the Bank of England’s interest rate decision with GBP traders taking particular note of any signs of bearishness from the BoE.
Meanwhile TRY investors will be looking ahead to Monday’s release of industrial production figures for October, with any signs of an increase supporting the struggling Turkish Lira (TRY).
Friday, meanwhile, will see the release of GBP/TRY exchange rate affected by the release of Turkish consumer confidence figures for December, with TRY traders taking particular note of any signs of bullishness.