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Pound Turkish Lira (GBP/TRY) Exchange Rate Dips, UK Construction Output Suffers in October

Turkish Lira Currency Forecast

GBP/TRY Exchange Rate: UK Construction Remains in ‘Ditch’

The Pound Turkish Lira (GBP/TRY) exchange rate eased today, with the pairing currently trading around ₺7.352 after the UK Construction PMI for October remained firmly in contraction territory at 44.2, dampening market confidence in the British economy.

Duncan Brock, Group Director at the Chartered Institute of Procurement and Supply, was downbeat, saying:

‘To say these figures are disappointing is a big understatement. Given that the next political hurdle is December’s General Election, all eyes will be on the new administration and clear direction, because at the moment there is little insight into what could possibly pull the sector out of its ditch.’

British political news remains in focus, and while the Tories are expected to secure their lead in the polls, analysts remain cautious about predictions for a hung parliament on 12 December, leaving the GBP/TRY exchange rate subdued on rising uncertainty.

TRY/GBP Exchange Rate Improves despite Weak Inflation

The Turkish Lira (TRY) edged higher against a weakened Pound (GBP) following this morning’s Turkish inflation figure for October, which rose from 0.99% to 2% on the month, while deteriorating to 8.55% on the year.

However, after the credit ratings agency Fitch revised Turkey’s economic outlook from “negative” to “stable” last week, appetite for the Turkish Lira increased.

Analysts at Fitch commented:

‘Turkey has continued to make progress in rebalancing and stabilizing its economy, leading to an easing in downside risks since our previous review in July.’

In political news, Turkey’s Prime Minister Tayyip Erdogan may call off his visit to Washington next week in protest of proposed sanctions on Turkey. As a result, we could see the Turkish Lira begin to lose some of its gains on heightened political uncertainty in the near term.

Any signs of a flare-up between Turkey and the US could diminish appetite in the Turkish Lira, as this would exacerbate an already volatile political situation and weaken the Turkish economy.

GBP/TRY Outlook: Could the Turkish Lira sink on Renewed Political Tensions?

Pound traders will be awaiting tomorrow’s release of October’s UK Markit Services PMI, which is expected to remain in recession territory at 49.7.

Tomorrow will also see the publication of October’s UK BRC Like-For-Like Retail Sales, which are expected to improve from -1.7% to 1.4%.

Meanwhile, Turkish Lira traders will be focusing on political developments this week, and with any signs that Mr Erdogan could cancel his US visit, we could see the TRY/GBP exchange rate lose some of today’s gains.

The GBP/TRY exchange rate will be driven by UK political news for the first part of this week, with any signs that the Conservatives could secure their position ahead of December’s general election likely to boost the Pound on a returning sense of political stability.