The GBP to TRY exchange rate is currently bearish.
Key drivers include the interest rate differential, with the Bank of England expected to lower rates to 3.25% by mid-2026, while the Central Bank of Turkey forecasts a reduction to 25.5% amid ongoing inflation pressures. Additionally, fiscal policies in the UK are raising concerns, potentially leading to further rate cuts and impacting the pound. Economic growth forecasts also indicate a slowdown in both regions, with the UK predicted to drop to 1.4% growth in 2026.
In the near term, the exchange rate is likely to remain within a range, maintaining levels above its recent average but facing volatility influenced by policy changes.
One potential upside risk exists if inflation in the UK decreases faster than expected, prompting the BoE to reconsider its rate cuts. Conversely, a larger-than-anticipated depreciation of the Turkish lira alongside economic instability could exert downward pressure on the GBP/TRY rate.