GBP/TRY Outlook:
The GBP/TRY is slightly positive, but likely to move sideways as it is currently trading above its recent average and closer to the middle of its three-month range. The lack of a clear driving force means the exchange rate will likely hold its current position for the time being.
Key drivers:
• Rate gap: The Bank of England's cautious stance on interest rates contrasts with Turkey's recent cut, indicating a differing approach to monetary policy that could pressure the pound.
• Risk/commodities: Oil prices have been volatile, with markets reacting to global uncertainties, which tends to influence currencies like the TRY, typically sensitive to commodity price shifts.
• One macro factor: UK inflation levels are expected to cool, which might heighten expectations for a faster pace of policy easing by the Bank of England, impacting the GBP negatively.
Range:
Expect the GBP/TRY to drift within its recent range as it stabilizes around the current position.
What could change it:
• Upside risk: A significant rebound in UK employment data could bolster the pound.
• Downside risk: Further declines in UK inflation may lead to increased rate cut expectations from the Bank of England.
