The GBPTRY pair rallied this week after Armenia said that one of their jets was shot down by a Turkish F-16. Turkey denies the claim, but tensions have been rising between Armenia and Azerbaijan, which is an ally of Turkey. The fighting is at risk of seeing Russia drawn into a proxy war as the country has a military base in Armenia.
France has slammed Turkey’s behavior as ‘reckless and dangerous’ after Ankara committed full support for Azerbaijan to reclaim Armenian territory, whilst Russia called on the conflict to be ‘immediately ended’ and warned Ankara not to ‘add fuel to the flames.’ The tensions in the region risk seeing further losses in the Turkish Lira, which is currently struggling after a recent downgrade of the country’s debt and its banks.
Turkey’s central bank surprised markets with a 2% interest rate hike from 8.25% to 10.25% as the country struggles with a hot inflation rate of 11.77%. Turkey’s interest rates were previously near 25% when the GBPTRY was at 6.50. Falling interest rates in Turkey to the 8.25% lows saw the rate climb to 10.00 but the recent economic turmoil has not led to a cooling of inflation as expected.
The pound has been recovering from Brexit fears as the talks seem to be back on track and the Bank of England’s Andy Haldane added to another member’s comments this week that cooled expectations of imminent negative interest rates in the U.K. Dave Ramsden said the current 0.1% was likely the lower bound and Haldane said that none of the required conditions are present in the economy. The Lira is likely to move based on the current conflict and the inflation rate and the pair may be volatile as the October 15th Brexit agreement deadline approaches.
GBPTRY Technical Outlook
GBPTRY has tested the 10.00 level this week and found initial resistance. This will be the key level going forward for the pair. Support comes in at 9.600 and 9.500 ahead of the 50-day moving average. A move through there will see a test of the 9.000 level. Another close above 10.000 will continue the upside trend. The Investing Cube team is currently available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.
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GBPTRY Daily Chart
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