Pound Mexican Peso (GBP/MXN) Exchange Rate Falls on Tory Cabinet Rebellion Rumours
The Pound Sterling Mexican Peso (GBP/MXN) exchange rate slumped and the pairing is currently trading at around Mex$23.8911.
The Pound slumped against the Peso on Wednesday despite reports that the European Union was ready to agree to a major concession during Brexit negotiations.
The Times reported that the EU is prepared to offer the Northern Irish assembly a mechanism that allows them to leave the backstop after an unspecified number of years.
Commenting on the report, currency strategist at MUFG, Lee Hardman said:
‘By allowing Northern Ireland to take the decision on whether they want to stay in the EU or not, the market has taken this news positively as it will be a major step towards a breakthrough in the Brexit deadlock.’
However, Sterling remained under pressure as further reports stated that Prime Minister Boris Johnson could face a rebellion in his cabinet.
The Times said an unnamed cabinet minister said that if Johnson pulls out of the bloc without a deal, a ‘very large number’ of Conservative MPs are prepared to resign.
Mexican Peso (MXN) Rises as Inflation Eases to Banxico Target
On Wednesday, data revealed that Mexico’s inflation eased in September which provided the Mexican Peso with an upswing of support.
Inflation came in line with the Bank of Mexico’s (Banxico) 3% target for the first time in three years.
However, this supported expectations that the bank will continue lowering interest rates to boost the sluggish economy.
Inflation edged up 3% from a year earlier, making this the lowest 12-month rate since September 2016.
The Peso rose as BBVA analysts predict that year-end inflation will slow to 2.7%, and core inflation will ease to 3.3% thanks to the weaker economy but a more stable Peso.
In a report, the BBVA wrote:
‘We are certain that headline inflation will end the year below 3%, but we…now believe that inflation will close the year somewhat closer to 2.5% than to 3%.’
Banorte: Aggressive Trump Could Send Mexican Peso (MXN) Lower
Meanwhile, on Tuesday, Mexican financial group Banorte said that the Mexican Peso could slump close to 9% against the US Dollar next year if President Donald Trump threatens Mexico during his re-election campaign.
Through Twitter, the US President has repeatedly sent the Peso tumbling after attacking the country over trade and immigration, and threatening to impose tariffs on Mexican goods or close the border.
Director of economic analysis at Banorte, Gabriel Casillas stated:
‘It is likely that [Trump] will become extremely aggressive in his protectionist rhetoric, both at migratory and commercial levels, and this will cause an appreciation of the Dollar.’
Pound Mexican Peso Outlook: Will Weak Mexican Industrial Output Weigh on MXN?
On Thursday, the Pound (GBP) could extend its losses against the Mexican Peso (MXN) following the release of August’s GDP growth.
If data shows the economy has stagnated or fallen into contraction in the three months to August, Sterling sentiment is likely to be left dampened.
Meanwhile, looking ahead to Friday, August’s Mexican industrial output could leave the pairing muted.
If output slides further than expected at the end of the week, it could leave the Pound Mexican Peso (GBP/MXN) exchange rate flat.