The Pound Sterling to Euro (GBP/EUR) exchange rate softened on Monday while the Pound Sterling to US Dollar (GBP/USD) exchange rate remained in a tight range; conversely, the Pound Sterling to Turkish Lira (GBP/TRY) and US Dollar to Turkish Lira (USD/TRY) exchange rates jumped by over 3.0% as Turkish politics continued to weigh on the Lira.
Tuesday saw the Turkish Lira recover some losses against the Pound (TRY/GBP) after the CBI downgraded its growth forecasts.
The CBI stated: ‘Risks to UK growth are tilted to the downside. A messy resolution of the Greek crisis could spark financial market and exchange rate volatility which could spill over into the real economy.’
Turkey’s GDP Growth Rate Prints Favourably, Turkish Lira (TRY) Exchange Rate Supported
Wednesday morning saw the Pound Sterling to Turkish Lira (GBP/TRY) and Pound sterling to Euro (GBP/EUR) exchange rates soften, while the Pound Sterling to US Dollar (GBP/USD) exchange rate climbed.
Turkey’s GDP Growth Rate rose by 1.3% quarter-on-quarter in Q1, while the annual figure softened from 2.6% to 2.3%. However, the result was favourable in comparison to economists’ forecasts which had expected the figure to slip to 1.7% on the year.
Turkish Lira (TRY) Exchange Rate Hits All-Time Low versus US Dollar (USD) on Turkish Election Uncertainty
During Monday’s session the Turkish Lira (TRY) hit an all time low against the US Dollar (USD) of 2.81
J.P Morgaan representiative David Stubbs commented: ‘Particularly in emerging markets, investors like certainty and strong leadership and that is exactly what Turkey is now lacking. Uncertainty like this is the last thing a country like Turkey needs right now.’
Tuesday morning saw the Pound Sterling to Turkish Lira (GBP/TRY) and US Dollar to Turkish Lira (USD/TRY) exchange rates trending within a narrow range after making marked gains on Monday.
Turkish Elections cause Turkish Lira (TRY) Exchange Rate to Drop as Political Uncertainty Ensues
Turkish elections held on Sunday gave a rather surprising result, with President Recep Tayyip Erdogan of the Justice and Development party (AKP) falling short of an outright majority for the first time since 2002 with 41% of the vote. Erdogan had hoped for a two-thirds majority in order to make Turkey into a residential republic and give himself more power.
Industry expert Henri Barkey commented: ‘This was a major defeat for Erdogan and it could usher in a period of heightened instability and confused policy.’
The Peoples’ Democratic Party (HDP), which is largely known to represent the Kurds, but also other minorities and women, took 12% of the vote.
HDP leader Selahattin Dimitris ruled out the prospect of a coalition with the AKP, saying: ‘The discussion of executive presidency and dictatorship have come to an end in Turkey with these elections.’
‘We, as the oppressed people of Turkey who want justice, peace and freedom, have achieved a tremendous victory today. Now the HDP is a real party of Turkey. HDP is Turkey and Turkey is HDP.’
Meanwhile, the Republican People’s Party (CHP) was the second most popular group with 25% of the vote.
CHP Istanbul Charman Murat Karayalcin commented: ‘Voters said a clear no to the presidential system.’
Economist Sertan Kargin weighed in on the political situation, saying: ‘The current hung parliament will probably be viewed by the market as the worst outcome of the June 7th elections, and probably hit Lira assets for some time to come.’
Erdogan breaks his silence sounds a conciliatory note:”The will of the people is above all else.” #TurkeyElections
— Amberin Zaman (@amberinzaman) June 8, 2015
The Lira (TRY) exchange rate hit an all-time low versus the US Dollar (TRY/USD), sliding by 5.2% as the nation undergoes political shakeup.
However, it appears as if many other parties such as the Nationalist Movement Party aren’t willing to form a coalition with the AKP.
Analyst Mehmet Sahin commented: ‘If MHP is saying no to a coalition with AK Party, then it will be very difficult for the AK Party to reach an agreement with CHP because rhere is a serious issue of incompatibility. That would mean ealt elections, because a minority government would not really work.’
Turkish Retail Sales Jump, Industrial Production Falls Less than Forecast – Lira (TRY) Exchange Rate Still Softens
Meanwhile, by way of data, Turkish Retail Sales registered 0.3% growth in April, while March’s ecostat was positively revised to 0.4%. Therefore, the annual Turkish Retail Sales number was able to climb from 3.1% to 3.8%. Additionally, the Turkish Industrial Production stat failed to fall as low as economists had forecast, softening from 4.7% to 3.8% on the year in April. Economists had predicted a much larger slip to 3.3%.
Wednesday will be another major day for the Turkish Lira (TRY) exchange rate with the release of Turkey’s Gross Domestic Product (GDP) growth rate stats.
The Turkish Lira to Pound Sterling (TRY/GBP) exchange rate is trending in the region of 0.2377 with -3.23% market movement.
Euro (EUR) Exchange Rate Climbs Despite Greek Uncertainty
Meanwhile, the Euro (EUR) exchange rate managed to advance despite the situation in Greece remaining unresolved. The situation between Greece and its creditors has been heating up with debate coming from all sides. Over the weekend President of the European Commission Jean-Claude Juncker refused to talk to Greek Prime Minister Alexis Tsipras and accused him of lying to the Greek government and undermining negotiations.
Juncker stated: ‘Alexis Tsipras promised that by Thursday evening he would present a second proposal. Then he said he would present it on Friday. And then he said he would call on Saturday. But I have never received that proposal, so I hope I will receive it soon. I would like to have that Greek proposal.’
German Industrial Production and Trade Balance Data Buoys Euro (EUR) Exchange Rate
However, despite the constant debate, the Euro (EUR) exchange rate was able to rise after Eurozone domestic data printed positively. German Industrial Production rose by 1.4% on the year in April after March’s 0.2%. Additionally, the German trade surplus failed to fall as much as forecast, instead softening slightly from 23.1B to 22.1B in April.
On a more disappointing note, the Sentix Eurozone Investor Confidence index slipped from 19.6 to 17.1 in June, rather than the 18.7 forecast.
The Euro to Pound Sterling (EUR/GBP) exchange rate is trending in the region of 0.7304 with market movement of +0.36%.
US Dollar (USD) Exchange Rate Forecast for Fluctuations on US Advance Retail Sales and Confidence Data
Over in the US today there’s little domestic data due for release, which leaves the US Dollar (USD) exchange rate to fluctuate on account of macroeconomic developments as well as from any central bank statements or speculation regarding Federal Reserve interest rate hikes.
Thursday’s likely to be the most influential day for the US Dollar (USD) exchange rate with the release of US Advance Retail Sales data. The May ecostat is forecast to come in at 1.2% after April’s 0.0%, which could help to bolster the US Dollar (USD).
Friday will be another major day for the US Dollar (USD) exchange rate with the release of the US University of Michigan Confidence ecostat.
The US Dollar to Pound Sterling (USD/GBP) exchange rate is currently trending in the region of 0.6562 with +0.18% market movement.
Pound Sterling (GBP) Exchange Rate Forecast – GBP/USD, GBP/EUR, GBP/TRY
Meanwhile, it’s a relatively quiet week for major UK data, but the Pound Sterling (GBP) exchange rate could be in for movement on Tuesday with the release of UK Trade Balance stats. Wednesday will continue with UK Industrial Production and Manufacturing Production data, which is forecast to have a moderate effect on the Pound Sterling (GBP) exchange rate.
The Pound Sterling to Turkish Lira (GBP/TRY) exchange rate is currently trending in the region of 4.2482. The Pound Sterling to US Dollar (GBP/USD) exchange rate is trending at 1.5506. The Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the vicinity of 1.3707.
