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The British Pound (GBP) to Turkish Lira (TRY) exchange rate is a currency pairing that has seen dramatic swings in recent years due a number of factors. Below is some information about each currency and the history of the GBP / TRY exchange rate.
The British Pound, aka Sterling, is the official currency of the UK, as well as several other small territories around the globe. One Pound is subdivided into 100 pence. Its currency code is GBP and the currency symbol is £.
As the world's oldest continuously traded currency, the Pound is its fourth most traded, with only the exchange of US Dollars (USD), Euros (EUR) and Japanese Yen (JPY) coming ahead of it in volume. Sterling is issued by the Bank of England (BoE), which also sets interest rates for the UK economy.
The term Pound Sterling was initially derived from the Old English term for small star, which was present on the coins at the time. Forex traders in currency markets often use the term 'Cable' to denote the Pound to Dollar exchange rate (GBP / USD).
Interesting to know: the British Pound is colloquially known by many names, including a 'quid' (£1), a 'pony' (£25), a 'monkey' (£500) and a 'grand' (£1,000).
The Turkish Lira (TRY) is the official currency of the Republic of Turkey as well as the disputed Turkish Republic of Northern Cyprus. One Turkish Lira is subdivided into 100 kuruş. The currency code for the currency is TRY and its currency symbol is ₺.
During the time of the Ottoman Empire the official currency of Turkey was the Ottoman Lira. This was replaced by the First Turkish Lira in 1923, the value of which was pegged to the British Pound and the French Franc. During its history, the First Turkish Lira suffered a dramatic fall in value and was named as the world’s least valuable currency by the Guinness Book of Records.
In 2005 the Turkish Lira was revalued – henceforth being known as the Second Turkish Lira aka the New Turkish Lira – with six zeroes removed in the process.
Interesting to know: Interest rates in Turkey are set by the Central Bank of the Republic of Turkey, although there is some dispute as to its independence as a result of political pressure from the sometimes controversial Turkish President Recep Tayyip Erdoğan, whose unorthodox description of interest rates as “the mother and father of all evil” has caused unease on FX markets.
The Pound Turkish Lira exchange rate (GBP / TRY) has had something of a dramatic history. Since its inception in 2005, the New Turkish Lira (TRY) has substantially fallen in value against the British Pound (GBP).
When it was first revalued one Pound would buy approximately ₺2.5, whereas today one Pound fetches just under ₺8.00. The main reason for this dramatic devaluation can be traced to a series of debt crises that impacted the Turkish currency starting in 2016, with a major flare-up in 2018. High inflation and rising borrowing costs due to a strong US Dollar (USD) led to rising loan defaults and forced the subsequent devaluation of TRY. High rates of inflation have stunted economic growth in Turkey, perpetuating the problem further.
In 2020 so far, the GBP / TRY exchange rate has been rising steadily from around ₺7.8 to the ₺7.95 range today – one of the few currencies that the Pound has strengthened against this year.
The British Pound (GBP) is influenced primarily by Bank of England rates and UK political and economic developments. With the major part of the UK economy relying on consumer spending and financial services (stocks, bonds & insurance products traded in the City of London), the valuation of the Pound can be sensitive to any factor which affects these.
Immediately after the Brexit referendum in the UK there was a widespread slump in the value of the Pound on world markets, although in the case of GBP / TRY this was outweighed by the emerging economy debt crisis, which was considered more impactful.
Markets remain sensitive to political developments within Turkey, with several key issues, including jitters over Cyprus and spillover from the conflict in Syria, remaining at the forefront of TRY investors’ minds.
The British Pound Turkish Lira (GBP / TRY) exchange rate today is being driven by global risk assessment and political developments. Some analysts are predicting that the Pound will continue to rise against the Turkish Lira for the foreseeable future on the basis that the Turkish economy has fundamental flaws that need to be addressed before TRY can be said to be on a steady footing. One of the key aims of the Turkish government is to reign back inflation, which is hampering economic growth.
In Mar 2020 the Bank of England opted to cut interest rates in order to stimulate the economy in the face of fears relating to the coronavirus. This has so far proved to be not enough to shore up the Pound against the majors, although against the Turkish Lira there has been some upward momentum.
In the immediate future, the Pound to Turkish Lira exchange rate is likely to be driven by the economic fallout from the coronavirus pandemic, with TRY likely coming under further pressure as US Dollar rates rise, thus making it harder for Turkish businesses to pay Dollar-denominated loans and pay for imported commodities priced in USD.
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