The Pound Turkish Lira (GBP/TRY) exchange rate has plummeted today, as growing concerns of a no-deal Brexit offsets some upbeat UK employment figures.
At the time of writing the GBP/TRY exchange rate is down around 0.8% so far today, leaving the pairing trading at around TRY7.0868.
Pound (GBP) Battered by Brexit Malaise
The Pound (GBP) has fallen sharply against the Turkish Lira (TRY) today as a Sterling selling bias persists in spite of some strong UK employment data.
According to data published by the Office for National Statistics (ONS), unemployment held at a 44-year low in May, while domestic wage growth (excluding bonuses) shot up from 3.4% to a decade high of 3.6%.
However, the upbeat data has not been enough to lift the Pound in the face of some persistent Brexit jitters.
This comes as the risks of a no-deal Brexit appear to be on the rise, with the two contenders to become the next UK Prime Minister seek to take a hard line stance on the issue of the Irish backstop.
Thu Lan Nguyen, a currency strategist at Commerzbank, explains:
‘The Pound’s weakness is a reaction to the two prime minister contenders opposing the Irish backstop, which dramatically reduces the chance for a Brexit with a deal.
‘So this leaves only two options, no-deal Brexit, or no Brexit. As both Johnson and Hunt have made clear they want Brexit, chances of a no-deal Brexit are rising.’
Meanwhile, aiding the Turkish Lira’s rally against Sterling was the publication of Turkey’s own employment figures, with TRY investors welcoming a sharper-than-expected fall in unemployment in April, as the jobless rate tumbled from 14.1% to 13%.
GBP/TRY Exchange Rate Forecast: Sterling to Struggle on Flat UK Inflation Reading?
Looking ahead, the Pound Turkish Lira (GBP/TRY) exchange rate may be left on the back foot in the mid-week, following the publication of the UK’s latest CPI reading.
Whilst economists forecast that inflation will have held within the BoE’s target rate at 2% in June, analysts believe this is unlikely to deter the bank from easing monetary policy later in the year, something which will likely continue to limit any upside in Sterling.
In the meantime, the release of Turkey’s latest retail sales figures could drag on the Lira on Wednesday morning if they reveal that sales growth contracted for a second consecutive month in May.