CBRT Decision, Lacklustre UK Retail Sales Cap GBP/TRY Below 21.68
The GBP/TRY pair gained ground on Thursday after the Central Bank of the Republic of Turkey (CBRT) left its interest rates unchanged at 14% in a decision that met market expectations. This is the 7th time in a row that the interest rates have been left unchanged in the face of rising domestic inflation. The consumer price index for Turkey rose to 79% on an annualized basis, marking 24-year highs. The bank also noted an increased likelihood for recession.
The event caused a weakening of the Lira, causing it to lose 0.87% against the Pound. However, the GBP/TRY pair appears to have lost bullish momentum following lacklustre retail sales and manufacturing PMI data from the UK. Flash Manufacturing PMI in the United Kingdom registered at 52.2, a 6 point drop from the previous print.
Services PMI data came in at 53.3, which was lower than the previous month’s upward revision of 54.3. Though the figures were not as bad as the markets had expected, they took the wind off the sails of the Pound. The CBRT decision keeps the Lira at the mercy of divergent fundamentals. The GBP/TRY pair is slightly lower (-0.17%) as of writing, but the pair maintains a weakly positive outlook.
The 19 July break of the resistance at 20.8701 has given the bulls clear skies to target the 21.6810 resistance level (8 June high). A break of this barrier resumes the uptrend via the formation of the higher high that complements the higher lows of 29 June and 15 July 2022. A break of this level targets the 22.6092 price mark, where the 17 December 2021 daily candle peaked.
The 20 December 2021 all-time high on the pair at 24.2411 forms the other northbound target. Conversely, the bears would be hoping for a break of the structure via a downgrading of the support levels at 20.8701 (former resistance-turned-support) and 20.4506 (1 June and 15 July 2022 lows).
This move would target the 20.0658 support level (29 June 2022 low) before the 18 May 2022 low at 19.6676 comes into the mix as a new downside target. Additional barriers to the south are located at 18.8847 (22 April 2022 low) and 18.3813, where the 29 April/9 May double bottom is found.