The Pound Sterling to Turkish Lira (GBP/TRY) exchange rate gave up some ground on Tuesday as the UK currency came under pressure from ‘Brexit’ concerns.
The Pound Sterling to Turkish Lira (GBP/TRY) was trading in the range of 4.1796 – 4.2377
Following the surprise Turkish election result on Sunday, the Turkish Lira tumbled sharply against the majority of its most traded peers. President Tayyip Erodogan’s ambitions to seize more powers for himself was dealt a blow as the Turkish people rejected his Islamist ideas and plans to send the most moderate Middle Eastern nation deeper into conservatism and further under religious influence.
The country now faces weeks of uncertainty as the various political parties will struggle to form a coalition government. The result also raises the prospect of a return to the polls if no deal is reached.
‘The possibility of a government coming out of the current situation is very slim. With these results, an early election seems inevitable. Everything, from the economy to big projects, is currently on hold, and we don’t have the luxury of continuing with an uncertain and weak government at a time when the world is facing great economic risks,’ said a senior AKP official.
Sterling meanwhile received support from a report released by the London based Office for National Statistics (ONS) which showed that the UK’s trade balance improved strongly in the month of April. The positive data added to hopes that a revival in exports will contribute to GDP in the second quarter.
The nation’s trade deficit narrowed to £1.2 billion in April, the lowest seen since March 2014 from the upwardly revised £3.1 billion deficit recorded in the preceding month.
The goods deficit was shown to have narrowed from £10.7 billion to £8.5 billion. Exports were shown to have increased by 4.8% in April, the largest increase seen since September 2014.
‘The April trade data show considerable improvement, thereby raising hopes that net trade may well help UK GDP growth to improve in the second quarter. While UK GDP growth will clearly remain largely reliant on domestic demand, the hope has to be that exports will increasingly benefit over the coming months from improved Eurozone growth. However, the strength of the Pound against the Euro threatens to continue to constrain the upside for UK manufacturing exports to the Eurozone,’ said Howard Archer, an economist from IHS Global Insight.
The Pound could reach a new record high on Wednesday if UK manufacturing and industrial production data comes in positively.
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