Turkish Lira Climbs as Threat of Syrian Strike Fades, Pound Advances

Published: 2 Sep at 4 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, Australia, USA, China, South Africa, Turkey,

Overnight commodity-driven currencies, including the Australian Dollar and South Africa Rand, strengthened against their peers as China’s manufacturing sector expanded in August, boosting global trade prospects.

And as the local session progressed on Monday emerging market assets like the Turkish Lira gained as fears of an imminent strike on Syria receded and the central bank implied that it will support the currency.

The Lira rallied by 1.1 per cent, strengthening to 2.0158 Lira per Dollar, as the Governor of the central bank of Turkey asserted that ‘surprise’ tools would be utilised in defence of the Lira, and that interest rates will remain unchanged for the rest of 2013.

As currency strategist Erkin Isik commented, the market ‘expects the central bank to announce further measures to lead the Lira to recover its earlier weakness. Lack of any further measures may prompt further underperformance, at least against emerging markets.’

Last month the Lira softened by 5.1 per cent against its US rival as Federal Reserve easing concerns and Syria worries weighed on the emerging market currency.

Meanwhile, the Pound was able to broadly strengthen, posting a notable gain against peers including the Euro and US Dollar, as UK manufacturing surged in August.

A gauge of UK manufacturing hit a two and a half year high last month after jumping from an upwardly revised 54.8 to 57.2 in August.
Economists had forecast that the index would advance to 55.0.

In a statement published with the figures Markit economist Rob Dobson asserted: ‘The UK’s factories are booming again. Orders and output are growing at the fastest rates for almost twenty years, as rising demand from domestic customers is being accompanied by a return to growth of our largest trading partner, the Eurozone. [...] growth could easily break the 1.0% mark in the third quarter [as] Manufacturing is clearly making a strong positive contribution to the economy’.

However, Dobson also noted: ‘Looking at the broader economic picture, the new forward guidance provided by the Bank of England places greater emphasis on job creation alongside economic growth and price inflation. While the latest PMI suggests that the output side is increasingly positive, the news on the other fronts is much less so [...] Employee numbers crept up only slightly [...] at the same time, the rate of input cost inflation surged upwards on the back of rising oil and related prices.’

After the UK data was published the Pound climbed towards a two-month high against the Euro and climbed by 0.5 per cent against the US Dollar.

Additional Sterling movement can be expected to occur tomorrow in response to UK house price and construction data.

The Pound is currently trading against the Euro in the region of 0.8476 pence.
As of Monday, 2nd September 2013, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1786, GBP USD exchange rate was 1.5546, GBP AUD exchange rate was 1.728, GBP CNY exchange rate was 9.5137, and GBP ZAR exchange rate was 15.9583.

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