GBP/TRY Outlook: Slightly positive, but likely to move sideways as the rate is above its recent average and lacks a clear driver.
Key drivers:
• Rate gap: The Bank of England’s cautious approach to rate cuts contrasts with Turkey’s recent rate reduction, maintaining pressure on the lira.
• Inflation trends: UK inflation is expected to decrease towards the BoE's target, while Turkish inflation has risen sharply due to supply disruptions, affecting the lira's strength.
• Economic growth projections: Slowing GDP growth in the UK could limit the pound's potential against the lira.
Range: GBP/TRY is likely to drift within its recent range as there are no strong upward or downward catalysts.
What could change it:
• Upside risk: A shift in the UK economic outlook with stronger than expected growth could bolster the pound.
• Downside risk: Further increases in Turkish inflation could lead to more aggressive monetary easing by the Central Bank of Turkey, weakening the lira.