As Turkey heads for a presidential run-off, volatility returns for the lira. Additionally, The FTSE 100 opens higher, while pound struggles to regain form, trading below $1.25. Meanwhile, sharply lower US consumer sentiment increases worries about economy and knock-on global impact, and brent crude hovers below $74 a barrel, as investors wait for Chinese data out this week.

Hargreaves Lansdown head of money and markets, Susannah Streeter, commented: ‘”The scattergun of political uncertainty is keeping the Turkish lira on a volatile path, as the country heads for a run-off in the Presidential race. Erdogan has led highly controversial monetary policies aimed at increasing exports, rather than tackling painful inflation, and the prospect of Turkey’s ‘strongman’ winning another term has weakened the currency further. There are expectations of a rollercoaster ride in the days ahead, as sentiment waxes and wanes about the prospects for the opposition coalition, which has pledged to pull more conventional levers to restore financial stability.

“European indices have edged up on the open, with the FTSE 100 given a leg up after the dollar has strengthened, making the overseas earnings of multinational listings worth more. The pound has fallen back to $1.24 against the dollar, although it has strengthened very slightly. Investors appear to have run back into the greenback’s safe-haven arms as sentiment has been knocked about global growth prospects. This was not helped by a bleaker assessment of America’s prospects by consumers on Friday, as captured by the University of Michigan survey. Anxieties are colliding about the effect of high interest rates, combined with worries about the banking sector and now a potential US default as the debt ceiling deadline looms. The whipsaw in sentiment may continue this week with the US retail sales snapshot due out tomorrow. Although a recovery may help ease some concerns about falling optimism, it could also increase expectations that the Fed might be forced to hike interest rates further.

“Fears that a US recession will drag down demand in the wider world economy are weighing on oil prices. Brent Crude has dipped back below $74 dollars a barrel after the US consumer confidence snapshot showed that sentiment had slid to a six-month low. High hopes that China would pick up more of the slack have been dashed, with recovery in the globe’s second largest economy not quite as perky as forecast. A raft of data on industrial production, retail and the housing market are due out this week, which will be closely watched for signs that the post-pandemic recovery has regained more bounce.”

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