May 28, 2019 - Written by John Cameron
STORY LINK Pound Mexican Peso Exchange Rate News: GBP/MXN Steady as UK Mortgage Approvals Strike Two-Year High
Pound (GBP) Exchange Rates Buoyed by Surge in Mortgage Approvals
The Pound (GBP) traded robustly against the Mexican Peso (MXN) on Tuesday as markets welcome the release of the UK’s latest mortgage figures.
According to data published by industry body, UK Finance, 42,989 mortgages were approved in April, up from 40,564 in March and easily outpacing forecasts of a slide to 39,300.
This was a substantial improvement on the 38,554 home loans accepted by banks at the same point last year and saw approvals propelled to a new two-year high.
Analysts suggest that the rebound in approvals is likely down to the delay of Brexit, with consumers a little more confident in committing to a mortgage now that Brexit has been kicked down the road until at least October.
Howard Archer, chief economic advisor to the EY Item Club, said:
‘April’s marked rise in mortgage approvals suggests that housing market activity may well have got at least some temporary support from the avoidance of a disruptive Brexit at the end of March.
‘It may very well also be that the housing market has benefited from recent improved consumer purchasing power and robust employment growth.’
Of course this will likely see approvals begin to drop off again in the coming months as we near the next Brexit deadline.
Mexican Peso (MXN) Exchange Rates Languish amid Thin Trade and Trump Comments
Meanwhile, the Mexican Peso (MXN) is struggling to find support today as thin trade limits demand for emerging market currencies.
This was mostly driven by the closure of US and UK markets at the start of the week, which trimmed demand in currency markets.
Further restricting movement in the Peso on Tuesday were also reports that US President Donald Trump could seek to escalate trade tensions with China again.
This follows reports in Bloomberg that Trump is willing to play the long game with Beijing as he threated that US tariffs on Chinese goods ‘could go up very, very substantially, very easily’.
On top of this, demand for the Peso was also tempered by Mexico’s employment figures as domestic unemployment was reported to have climbed from 3.2% to 3.5% in April.
GBP/MXN Exchange Rate Forecast: UK Politics to Play Havoc With the Pound in the Coming Weeks?
Looking ahead, the Pound Mexican Peso (GBP/MXN) exchange rate looks set to be met by volatility in the coming weeks as the race to replace Theresa May as PM and leader of the Conservative party gets underway.
While the race won’t official get underway until next month, the political jockeying has already gotten underway, with 10 Tories announcing they will be running so far, with many already coming out swinging as they attempt to position themselves as at the front of the pact.
Of course the focus for GBP investors will be on how this may all impact Brexit, with markets likely to favour any candidate who seeks to avoid a no-deal Brexit.
Meanwhile the focus for MXN investors is likely to be on the publication of the minutes from the Mexican Central Bank’s May policy meeting later this week.
This may help to boost MXN exchange rates as the minutes are expected to reaffirm the Banxico’s commitment to leave interest rates on hold for the time being.
However in the meantime the Peso may also be impacted by the release of the Banxico’s inflation report on Wednesday, in which the bank is expected to warn that risks from weak wage growth could drag on inflation in the coming months.
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TAGS: Pound Sterling Forecasts