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Pound Recovers as No-Deal Brexit Possibility Ebbs; Turkish Lira Sinks (GBP/TRY)

July 8, 2019 8:45 am | Modified July 8, 2019 8:45 am
EUR, GBP, TRY, USD | BY Ben Scott

Thin trading conditions following the 4th July holiday last week, combined with some significantly better than expected US economic data, left the US Dollar (USD) exchange rate to jump higher ahead of the weekend break. However, the Sterling Dollar (GBP/USD) currency pair has seen some respite as speculation mounts that a no-deal Brexit simply won’t happen. Elsewhere, the Turkish Lira (TRY) has been under significant pressure after the country’s President removed the central bank Governor following a disagreement over policy.

Pound Slumps Against US Dollar (GBP/USD) after Non-Farm Payrolls

The Pound to US Dollar (GBP/USD) exchange rate crashed lower on Friday in the wake of some far better-than-expected economic data from across the Atlantic. The pair moved below 1.2500 for the first time since the flash-crash at the start of the year, after US Non-Farm Payrolls showed strong job creation. However, the market was content to focus on this in the short-term, rather than the sluggish wage growth data, which has the potential to deliver inflationary pressure and in turn, dictate monetary policy. Thin trading volumes in the wake of the 4th July holiday also likely played a role in exaggerating volatility with something of a recovery for Cable having already been seen since the event.

Pound Gains Over Euro (GBP/EUR) as No-Deal Brexit Idea Slips

A combination of optimism that a no-deal Brexit will be avoided, despite the ambitions of Boris Johnson, along with the release of some softer-than-expected economic data from the Eurozone this morning is serving to lend a little support to the Pound to Euro (GBP/EUR) exchange rate. An increase in the German Trade Surplus for May will be doing little to support the common currency, as such a move continues to illustrate the divergent state of economies across the currency bloc. As a result, Sterling is managing to drag itself away from last week’s lows, although any further clarity over the likely direction for the UK’s political situation has the potential to see this move being reversed.

Why Did it Move? – Pound to Turkish Lira (GBP/TRY)

The British Pound jumped against the Turkish Lira after news that Turkey’s President had fired the governor of the central bank. Media reports suggest the move came after the bank refused to cut interest rates, with such an approach calling into question the independence of the institution. Losses for the Turkish Lira have been broad-based, but against Sterling, after trading as low as 7.03 on late Friday, the cross now sits more than 2.5% higher at 7.24

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