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GBP to MXN Exchange Rate Surge Limited as Risk-Sentiment and Mexican Data Support the Peso

January 25, 2019 - Written by Tim Boyer

The Pound saw a strong surge in demand against many major currencies over the past week, but the British Pound to Mexican Peso (GBP/MXN) exchange rate’s gains were limited. Despite a brief overnight surge on Brexit hopes, risk-sentiment prevented the pair from hitting a new high.

Since opening this week at the level of 24.65, GBP/MXN has still trended with an upside bias throughout the week and is on track to sustain solid gains. However, GBP/MXN was unable to hold Wednesday’s three week high of 25.00 as the pair faced key resistance levels. At the time of writing on Friday, GBP/MXN was trending closer to the level of 24.84.

Investors piled into the Pound for most of the week, as speculation that UK MPs would work to avoid a No-deal Brexit built up steam.

However, as some late-week Mexican data beat market expectations and risky emerging market currencies were more appealing, the Mexican Peso’s losses were limited too.

GBP Exchange Rate Advances Slow amid Doubts for Brexit Bill Support


The Pound enjoyed one of its strongest weekly gains in over a year over the past week, but the British currency slipped back slightly from its best levels at the end of the week as investors continued to digest the week’s news.

After days of rallying on hopes that UK MPs were increasingly willing to support legislation to prevent a No-deal Brexit from becoming reality, the Pound saw another brief boost in demand on Thursday night.

A report from a UK newspaper claimed that Northern Ireland’s Democratic Unionist Party (DUP) had privately agreed that it would support the UK government’s Brexit plan, but only if the government could get assurances on the issue of the Irish backstop.

The DUP wishes for the UK government to get assurances from the EU that the controversial Irish backstop would have a clear time-limit.
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This news briefly led to stronger Pound demand, but the Pound slipped back on Friday as the DUP’s rumoured position didn’t change things much. According to Jeremy Stretch, Head of G10 Currency Strategy at Canadian Imperial Bank of Commerce:

‘The problem with the Sterling bounce is that the story is predicated upon a deal that is currently not on the table,

The EU currently demand that a backstop ‘insurance’ policy cannot be time limited.’


Overall though, hopes that a No-deal Brexit can be avoided have risen due to signs of cross-party support to delay the Brexit date. This helped the Pound to sustain major gains throughout the week.

MXN Exchange Rates Avoid Losses amid Stronger Mexican Data and Risk-On Movement


While the Pound sustained strong gains versus the Mexican Peso last week, it was unable to surge as much as against other major currencies due to some resilient demand for the Mexican currency.

Throughout the past week, hopes for US-China trade developments, Chinese economic stimulus, and cheaper commodity prices left investors more willing to buy risky emerging market currencies.

Signs of caution in major global Central Banks, like the Bank of Japan (BoJ) and European Central Bank (ECB), also made risks more appealing.

Weaker prices of major commodities, such as oil, make them easier for emerging markets to import. This typically means that weaker oil prices benefit emerging market currencies like the Mexican Peso.

On top of risk-sentiment, the Mexican Peso also found some late-week support in reaction to Mexico’s latest inflation and economic activity reports on Thursday.

Economic activity beat expectations in both monthly and yearly prints, coming in at 0.4% and 1.8% respectively.

The mid-month inflation rate figures for January fell short of forecasts, lightening concerns about price pressures rising too much.

GBP/MXN Exchange Rate Forecast: Brexit Developments and Mexican Growth Report Ahead


The Pound to Mexican Peso exchange rate is likely in for another week of volatility and pivotal movements, as major Brexit developments are possible while Mexican Peso investors focus on upcoming Mexican data.

Notable Mexican ecostats will be published throughout the week, starting with Mexican trade stats from December on Monday, followed by Q4’s Gross Domestic Product (GDP) growth rate projections on Wednesday.

Lastly, business confidence and manufacturing PMI stats from January will be published on Friday.

Mexico’s growth rate projections are likely to be particularly influential. The Mexican Peso could strengthen if Mexico’s growth rate impresses investors.

Brexit news will take focus for Pound investors, especially on Tuesday when UK Parliament is set to debate the government’s Brexit plan again.

Amendments and legislation that could influence the direction of the Brexit process could be voted in too, which could have a big impact on Pound movement.

Other political developments, such as US-China trade tensions, could also influence risk-sentiment and the Pound to Mexican Peso exchange rate next week.
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