Bias: bullish-to-range-bound, as GBP/TRY sits above its 90-day average and near the upper end of its three-month range.
Key drivers:
- Rate gap: BoE policy is argued to ease gradually while Turkey has already eased, widening the policy gap and supporting GBP versus TRY.
- Macro factor: UK inflation is expected to ease toward the BoE target later in 2026, underpinning a more resilient pound.
Range: The pair is likely to drift within the three-month range, with tests of the upper end possible.
What could change it:
- Upside risk: UK inflation proves stickier than expected, delaying BoE rate cuts and supporting the pound.
- Downside risk: Turkish inflation stays elevated or policy missteps renew lira weakness, pressuring GBP/TRY lower.