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Turkish Lira TRY Forecast to Outperform Pound Sterling GBP Following Turkish Election Result

November 3, 2015 - Written by Toni Johnson

Turkish Lira (TRY) Downtrend Forecast to End despite Geopolitical Tensions



The best performing global currency during yesterday’s session was an unusual one. The Turkish Lira (currency : TRY) has been heavily downsold in recent years thanks to its function as a proxy for the virtually untradeable Egyptian Pound (currency : EGP), Syrian Pound (currency : SYP) and the Iraqi Dinar (currency : IQD).

The emergence of the Arab Spring in North Africa and the march of the so-called Islamic State has seen the Lira smashed in the markets, sending the GBP TRY exchange rate from just above the two to one threshold four years ago to close to the five to one level in recent weeks.

The wholesale shift out of emerging markets currencies since global commodities markets reached a top in March 2011 has added to the pronounced downside for the Turkish tender.

Turkish Lira (TRY) Exchange Rate Forecast to Rally after AKP Election Victory



However, yesterday’s session brought a dramatic turnaround for the Eurasian unit, sending the Pound Sterling Turkish Lira exchange rate down to as low as 4.2570.

The retracement of almost 5% for the pair on the day followed the weekend news that Turkey’s Justice and Development Party (AKP) had won a surprise landslide victory in the nation’s General Election.

The result was billed by President Recep Tayyip Erdogan as a ‘vote for stability’ and investors appeared to view it as the least bad outcome, as evidenced by the shift into Lira-denominated assets which followed.

Analysts’ forecast for the Turkish unit moving forward have now improved.

Pound Sterling (GBP) Conversion rate Climbs after Better-than-Expected Manufacturing Output



Meanwhile, the Pound Sterling (currency : GBP) enjoyed strong support during the first half of yesterday’s European session, following the publication of a Markit / CIPS survey which suggested that activity levels in the UK’s manufacturing sector had reached their highest level for over a year last month.

The print of 55.5 versus an anticipated 51.8 is forecast to provide sustained support for the British unit in the short-to-medium term.

The next tier one risk event of note comes on Thursday with the latest Bank of England monetary policy announcement. No change to policy is anticipated from the Old Lady of Threadneedle Street.



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