Pound Sterling Mexican Peso (GBP/MXN) Exchange Rate Jumps Ahead of Mexican Growth Figures
The Pound Sterling Mexican Peso (GBP/MXN) exchange rate jumped by close to 0.7%, leaving the pairing trading at around Mex$24.7847
The Mexican Peso slumped against the Pound ahead of today’s Mexican GDP data.
The economy is expected to contract in the final three months of 2019, weighing on the Peso.
Added to this, MXN suffered losses after Monday’s global sell-off as risk appetite declined after a jump in the number of Covid-19 cases.
Increased fears of a pandemic sent the Latin American currency lower after the number of cases increased in Italy, South Korea, and Iran.
Commenting on this, Capital Economics’ senior economist, Jonas Goltermann said:
‘The spread of the virus outside of China […] combined with continued heavy restrictions within China, challenges the assumption that the outbreak will blow over with only limited damage to the global economy.’
However, the Peso touched an 11 week low and was set for its third consecutive session of losses despite the assumption of limited damage and Monday’s Mexican consumer prices.
Mexican inflation came in below forecasts, although the figure remained above the central bank’s target.
Pound (GBP) Jumps After Monday’s Selloff
Sterling rallied against the Mexican Peso on Tuesday as investors worrying about the spread of Covid-19 found some stability.
This encouraged traders to refrain from rushing into the safe-haven US Dollar, which had previously sent the Pound lower.
The slight boost in risk appetite buoyed GBP following Monday’s significant selloff, although this was not enough to boost the risk-sensitive Peso.
Meanwhile, traders are going to be focused on the upcoming post-Brexit trade negotiations between the UK and EU.
Recent reports have highlighted the two sides still remain far apart on key issues. Elsa Lignos, RBC Capital Markets Global Head of FX Strategy noted:
‘The two sides are far apart as a starting point and it remains to be seen how much progress they can make in the remaining nine months.’
Pound Mexican Peso Outlook: Weak Mexican Data to Send MXN Lower
Looking ahead, the Mexican Peso (MXN) could continue to slump against the Pound (GBP) following the release of Q4 GDP growth.
If the Mexican economy contracts in the final three months of the year, the Peso will fall.
Meanwhile, MXN could extend its losses following Wednesday’s retail sales data.
If December’s sales slide further than expected, the Pound Mexican Peso (GBP/MXN) exchange rate will rise higher.