The exchange rate for GBP to MXN has recently witnessed a notable decline, with the pair currently trading at 7-day lows near 24.18, which is 1.6% below its 3-month average of 24.58. This downward trend reflects a stable trading range over the past few months, oscillating between 23.96 and 25.29.
Analysts at KPMG have painted a concerning picture for the British pound, forecasting a considerably muted growth outlook for the UK economy, estimating an expansion of only 1% next year. Weaker consumer sentiment and rising unemployment levels are contributing to this forecasts. This negative economic sentiment has intensified ahead of the upcoming UK budget on November 26, raising fears about potential tax hikes and interest rate cuts by the Bank of England (BoE). Consequently, investor confidence in the pound has weakened, resulting in the currency trading at multi-month lows.
Recent data showed the GBP under pressure against major currencies, reflecting prominent downward adjustments in fiscal forecasts and expectations that the BoE will lower interest rates in the near future. The Office for Budget Responsibility hinted at a £20 billion budget shortfall, further complicating the outlook for the pound.
Conversely, the Mexican peso has shown resilience due to various factors. The cautious stance of the U.S. Federal Reserve, which is expected to keep interest rates steady, has generally supported the peso against a backdrop of a weaker U.S. dollar. Furthermore, the trend of nearshoring and robust foreign direct investment, particularly in manufacturing sectors, coupled with stable oil prices around $83–85 per barrel, have provided a beneficial backdrop for the peso.
Overall, the current market dynamics suggest a challenging environment for the GBP, with various economic uncertainties weighing on its performance, while the MXN appears to be supported by favorable external economic conditions and positive investment flows. Investors and businesses engaged in international transactions should monitor these developments closely as they influence not only the exchange rate but also potential cost implications.
