GBP/MXN Exchange Rate Rangebound as Mexican Industrial Figures Ease
The Pound Mexican Peso (GBP/MXN) exchange rate steadied, leaving the pairing fluctuating around MXN$23.892.
The Mexican Peso (MXN) stabilised the Pound (GBP) following comments from the Central Bank of Mexican (Banxico) yesterday.
Banxico said in its statement:
‘The growth outlook has continued to deteriorate, given the recent evolution of economic activity in Mexico. Most stressed that the current environment continues to present significant medium- and long-term risks that could affect the country’s macroeconomic conditions, its growth capacity and the economy’s process of forming prices.’
This follows the resignation of Mexico’s finance minister Carlos Urzúa this week, which has continued to haunt Mexican markets as political uncertainty mounts.
MXN also failed to benefit from the publication of the Mexican industrial output figures for May today.
These fell from 1.5% to -2.1%, further dampening market confidence in the Mexican Peso.
GBP/MXN Exchange Rate Flat as No-Deal Fears Return as BoE Predicts Near-Zero Rates
The Pound, meanwhile, benefited from yesterday’s financial stability report from the BoE.
UK’s central bank stated that the UK’s financial system is ‘prepared for Brexit and trade war fall-out.’
The BoE also said in its statement:
‘Even if a protectionist-drive global slowdown were to spill over to the UK at the same time as a worst-case disorderly Brexit, the core UK banking system would be strong enough to absorb, rather than amplify, the resulting economic shocks and continue to serve UK households and businesses.’
Sterling traders have been reassured by the ‘resilient’ stance by the central bank, further elevating market confidence in the Pound today.
Today, however, saw a speech by Gertjan Vlieghe, a member of the Monetary Policy Committee at the BoE, who said that a no-deal Brexit could see the bank slash interest rates to near-zero.
However, Pound traders have continue to absorb yesterday’s statement from the BoE due to a lack of UK economic data releases today.
GBP/MXN Forecast: UK Earnings Figures in Spotlight
There are no Mexican economic data releases next week, with MXN traders instead focusing on developments surrounding the US.
Any further indications that the US could press forward with tariffs on Mexican goods could further provide downwards pressure on the MXN/GBP exchange rate.
Pound traders, meanwhile, will be looking ahead to Tuesday’s printing of the average earnings figures for May.
Any signs of improvement would prove Pound-positive.
The GBP/MXN exchange rate will however be dictated by discussions surrounding Brexit and the Tory leadership race next week.