Pound Mexican Peso Exchange Rate News: GBP/MXN Stalls as Markets Await Fresh Brexit Developments

Modified: Thursday, 24 January 2019 12:05 BST - Written by John Cameron

STORY LINK Pound Mexican Peso Exchange Rate News: GBP/MXN Stalls as Markets Await Fresh Brexit Developments

Pound (GBP) Exchange Rates Slips Amid Lull in Brexit Headlines

The Pound (GBP) is on the defensive against the Mexican Peso (MXN) and many of its other peers this morning as investors await fresh Brexit developments to drive further impetus in Sterling.

GBP exchange rates have rocketed higher this week on the back of growing speculation that the UK will avoid a no-deal Brexit.

Wednesday’s surge came as the Labour party is reported to be ready to support an amendment that will forcibly remove the option of a no-deal Brexit from the table, whilst also urging the government to extend Article 50.

An extension to Article 50 is broadly seen as Sterling positive as it potentially opens the door to a second referendum, an outcome that is supported by markets, despite simultaneously creating greater uncertainty regarding the whole process.

However highlighting just how sensitive GBP has become to political headlines, a lull in further developments has led the Pound to run out of steam this morning.

With no other major developments on the horizon, this period of consolidation is likely to persist for the time being, with Sterling likely to remain subdued as investors seek to bank their recent profits.

Mexican Peso (MXN) Exchange Rates Steady on Chinese Stimulus Hopes

Meanwhile, the Mexican Peso (MXN) has stabilised alongside many other emerging currencies on Thursday as recent market jitters begin to ease following Beijing’s recent pledge to limit a slowdown in its economy through increased fiscal spending.

There are growing signs that the world’s second largest economy began to slow in the tail end of 2018, something that has prompted considerable angst in markets who fear a weak Chinese economy could accelerate a wider slowdown in global growth.

This came to a head at the start of the week as China reported that annual growth fell to a 28-year low in 2018.

Fortunately for the Mexican Peso and other risk sensitive currencies however the response from Beijing has been swift, with China’s economic ministries announcing plans to step-up stimulus efforts in response.

Chinese finance ministry official, Xu Guoqiao, said:

‘The tax cuts in this year will be more targeted and more substantial, increasing the benefits to companies and will be easier to implement.

‘That will effectively lower the cost of entrepreneurial activity and innovation, enhance the vitality of small and micro-sized enterprises, and increase employment.’

However some analysts remain pessimistic, forecasting that China’s economy will continue to deteriorate in 2019 despite the stimulus efforts, an outcome that may bode poorly for the Mexican Peso and other emerging currencies this year.

GBP/MXN Exchange Rate Forecast: Brexit to Remain Key Driver in Sterling

Looking ahead, Brexit is likely to remain the main catalyst of movement in the Pound Mexican Peso (GBP/MXN) exchange rate for the time being as markets brace for next week’s parliamentary debate on Theresa May’s Brexit ‘Plan B’.

Tuesday’s vote is seen as another key point in the Brexit process, with Sterling potentially resuming its uptrend if MPs attempt to wrest control away from the government.

In the meantime, the Confederation of British Industry (CBI) will publish its latest distributive trades index on Friday, with an expected rebound in retail activity possibly lifting GBP exchange rates.

Meanwhile the release of Mexico’s latest retail sales figures may offer some support to the Mexican Peso in the tail end of this week’s session as economists forecast sales growth will have rebounded from -1% to 0.1% in November.

However at the same time MXN exchange rates are also likely to remain highly sensitive to global risk sentiment, with the Peso potentially sliding if any further indicators of slowing global growth begin to emerge.

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