GBP/MXN Outlook:
The GBP/MXN exchange rate is slightly weaker, currently trading below its 90-day average and near recent lows. Political uncertainty in the UK coupled with a cautious stance from the Bank of England suggests limited upward momentum.
Key drivers:
• Rate gap: The Bank of England is leaning towards possible rate cuts due to easing inflation, while the Bank of Mexico is holding rates steady to manage its inflation risks.
• Risk/commodities: The Mexican Peso remains sensitive to global economic conditions, particularly influenced by commodity prices and U.S. economic performance, which can affect risk appetite for emerging markets.
• One macro factor: Economic projections indicate the UK’s GDP growth may slow, impacting the appeal of the pound compared to the peso.
Range:
The GBP/MXN rate is likely to drift lower within its recent range as external pressures and local developments continue to weigh on the currency.
What could change it:
• Upside risk: Stronger economic data from the UK or a shift towards a more hawkish tone from the Bank of England could boost the pound.
• Downside risk: Continued political instability in the UK could lead to further depreciation of the pound against the peso.
