A detained American pastor at the centre of a bitter dispute between Washington and Ankara could be released as soon as this month, US secretary of state Mike Pompeo said on Monday, triggering a rally in the lira.

The battered currency jumped as much as 3.8 per cent to a one-week high of TL6.050 against the dollar after Mr Pompeo said he wanted Andrew Brunson and other detained American citizens to be released immediately.

“Yes he could be released this month; he should have been released last month,” the secretary of state told reporters at the UN in New York, adding that the Trump administration wanted other US detainees to be released too.

But Mr Pompeo emphasised that while US and Turkish officials might meet in New York this week, America had nothing new to tell or offer Turkey.

A person familiar with US efforts to secure the release of Mr Brunson said the “ball was in Turkey’s court”.

The US spent months brokering a deal with Turkish counterparts to secure the release of Mr Brunson, who was arrested in Turkey in October 2016 and is on trial on terrorism and espionage charges. But the deal went sour after Mr Brunson was transferred from jail into house arrest in July rather than allowed to return to the US.

In the following days Donald Trump, who had personally intervened in efforts to free the preacher, responded by announcing sanctions on two Turkish ministers and raised tariffs on Turkish steel and aluminium imports. The US president’s steps unnerved investors in Turkey, exacerbating the lira’s problems as it spiralled into a currency crisis.

People in Washington familiar with the matter say Turkey’s President Recep Tayyip Erdogan, who had previously seemed to suggest trading Mr Brunson for Fethullah Gulen, a Pennsylvania-based Turkish cleric blamed by Ankara for a failed military coup, had overestimated his leverage over Washington. The two presidents had previously enjoyed amicable relations.

Some former US officials have also claimed that America mishandled the negotiations leading up to the previous deadline for Mr Brunson’s release.

Mr Pompeo added that he expected discussions about Mr Brunson to take place on the sidelines of the UN general assembly in New York. Mr Erdogan is due to address the gathering on Tuesday morning, half an hour after Mr Trump.

But the US secretary of state suggested that Washington was unwilling to shift on its insistence that Mr Brunson be released without any preconditions. “We’ve talked to the Turks; they know the expectation,” he said.

Mr Brunson’s next court hearing in the western city of Izmir is due to take place on October 12.

Turkish authorities moved the previous prosecutor off the case this month, in what some analysts say could be a sign that Ankara is looking to bring the criminal proceedings to a close, rather than seeking a sentence against Mr Brunson.

They also point to a two-year reduction last week in the sentence of Serkan Golge, a Nasa scientist and dual US-Turkish citizen who was jailed for seven and a half years in February. Others, however were more cautious. “Honestly, who knows?” said one US official. “It is impossible to read the tea leaves.”

Inan Demir, economist at Nomura, said that the fate of Mr Brunson was crucial for Turkish assets, which have held steady after a surprise decision this month by the central bank to increase interest rates to 24 per cent and the government’s decision to reduce growth targets to tame inflation.

“The proximate cause of the August sell-off in Turkish markets was the announcement of US sanctions. In this regard, the next key date for Turkish markets will be October 12, when Pastor Brunson has his next hearing,”

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