Dollar Could Benefit From US Debt Ceiling Impasse

0855 GMT – The Turkish lira falls as Turkey faces a runoff vote between President Recep Tayyip Erdogan and opposition rival Kemal Kilicdaroglu on May 28 after neither cleared the 50% threshold to win Sunday’s general election outright. Political uncertainty is keeping the lira volatile, Hargreaves Lansdown analyst Susannah Streeter writes. “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,” she says. “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.” USD/TRY rises 0.2% to 19.6591. ([email protected])

Sterling Could Fall if Data Prompts BOE to Hold Rates

0835 GMT – The Bank of England could leave interest rates steady in June if data Tuesday show U.K. wage growth moderated, potentially weakening sterling, ING says. Sterling will be “ultra sensitive” to the data as the BOE has stressed its next policy decision will largely depend on wages and inflation figures, ING analyst Francesco Pesole says in a note. The “downside risks are quite material” for sterling if wage growth eases and prompts the BOE to hold rates in June as markets are pricing in 20 basis points of rate rises, he says. “We expect this to be mirrored in a higher EUR/GBP, which we expect to rebound to above 0.8800 by the end of this month.” EUR/GBP trades flat at 0.8713. ([email protected])