[...] shrinking in the month of April mainly due to a dramatic fall in car production, with uncertainty ahead of the UK’s original EU departure date
[…] shrinking in the month of April mainly due to a dramatic fall in car production, with uncertainty ahead of the UK’s original EU departure date leading to planned shutdowns,” wrote ONS head of GDP, Rob Kent-Smith, adding “There was also widespread weakness across manufacturing in April, as the boost the early completion of orders ahead of the UK’s original EU […] production output. According to the data, the total inflation-adjusted value of output produced by manufacturers fell by 3.9% in April while industrial production output overall fell by 2.7%.
While the Bank of England have retained a tightening bias ( interest rates would likely be higher out with the Brexit uncertainty factor ), the latest round of data could dent the BoE’s […] to a sharp fall in manufacturing production. Most of this should only prove temporary, although rising uncertainty surrounding Brexit and the growing likelihood of an autumn general election means the Bank of England is unlikely to raise rates in 2019,” wrote ING developed markets economist, James Smith.
On politics, this week will see the Tory leadership contest get formally underway with a series of […] at the end of October, his placement as party leader and next Prime Minister has been linked to higher perceived odds of a no-deal outcome.
Recent weeks have seen the Turkish Lira firm markedly against a basket of major currencies, somewhat alleviating market concerns of a repeat of 2018’s Summer rout on the TRY.
For one, a supportive global back amid […] a barrier to upside for the TRY and peer EMs. Furthermore, declining oil prices over recent session amid global growth concerns has contributed to TRY strength – Turkey, like India, is relatively oil-deficient resulting in a mildly negative currency correlation with oil prices.
Moreover, positive news-flow regarding US-Turkey relations in the wake of the apparently positive Trump-Erdogan phone call helped to temper expectations of US-imposed sanctions.
While the Lira has benefited the perception or better Turkey-US relations following the call between President Tayipp Erdogan and his US counterpart, Donald Trump, this week relations looked set to sour once more as the US unexpectedly announced the ‘unwinding’of Turkey the F-35 program.
According to a […] to plans to acquire the Russian-made S-400 air-defence system.
In the letter, titled “Unwinding Turkey’s Participation in the F-35 Program,” Shanahan stated there will be “no new F-35 training” for Turkish pilots moving forward.
“This training will not occur because we are suspending Turkey the F-35 program; there are no longer requirements to gain proficiencies on the systems,†wrote Shanahan, adding”You still have the option to change course on the S-400.”
Outwith geopolitics, this week will see the Central Bank of the Republic of Turkey (CBRT) convene for their June monetary policy review. While the central bank is under pressure to lower interest rates in a bid to support higher borrowing and boost growth – a move which could be seen as warranted given the Try’s recent strength and improving price pressure – the plethora of downside risks still plaguing th Turkish economy is expected to prompt policyakers to stand pat on interest rates – leaving the one-week repo auction rate unchanged at 24%.
A challenging geopolitical back, difficult inflation dynamics, a deterioration in […] any premature policy rate adjustment to maintain price stability and support financial stability.”
While retaining a base case which sees the CBRT remain on hold at their June review, Danske Bank’s senior economist, Vladimir Miklashevsky, noted the all-but certain possibility of Fed rate cuts and inflating real rates in Turkey combined with global monetary easing could prompt the central bank to make a precautionary cut.
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