Pound Eyes Big Level as Turkish Lira Continues to Crumble
The British Pound is gaining ground against the Turkish Lira and looks ready to take out the 10.00 level. The U.S. dollar has touched a record high against the Turkish currency today after data showed another rise in inflation and the Pound should continue to advance.
The Turkish economy saw a drop of -11% in second quarter GDP and this was expected to dampen its recent inflationary troubles, which have seen the Lira lose 44% against the Pound since the beginning of 2019. Turkish inflation hit 11.77% in August, which is well above the official target and could see the bank come under pressure to raise interest rates, which would slow any recovery. The country’s central bank held interest rates at 8.25% during its August meeting after borrowing rates hit highs near 25% in 2019. We could see further action in an emergency meeting before the September meeting.
The inflation figures are another headache for Turkish authorities after the country increased lockdown restrictions over a rise in coronavirus deaths. Restrictions will be expanded from 14 provinces to all of the country’s 81, with large gatherings and celebrations reduced.
Another reason for traders selling the Turkish Lira is the ongoing tensions with Greece. The Europan Union has threatened Turkey with sanctions as the two countries see their most bitter relationship since the 1970s. Both countries have been carrying out navy and airforce drills in the eastern Mediterranean and Turkey have been exploring for oil & gas in waters that Greece say is theirs. This has led to EU officials threatening to blacklist officials involved and impose sanctions on the country.
GBPTRY Technical Outlook
The GBPTRY is looking to take out the previous resistance at the 10.00 level. The current trajectory and sentiment would suggest this is likely. If the Lira can catch a bid then the 9.75 and 9.5 levels would provide support or a chance to correct further to the 9.00 price. If you have little experience in trading exotic currencies then the Trading Cube team is available for one-to-one coaching.