The current exchange rate for GBP to MXN stands at 24.98, which is 1.1% below its three-month average of 25.26. The pair has traded within a relatively stable 4.3% range over this period, between 24.85 and 25.92.
Recent analysis highlights a mixed outlook for the British pound (GBP), particularly following a UK jobs report that showed a slowdown in the labor market. Despite this, expectations remain that the Bank of England (BoE) will maintain interest rates during its upcoming decision, bolstered by consumer price index data that may provide further support. HSBC and Deutsche Bank have both updated their forecasts for potential rate cuts, with HSBC suggesting rates could hold steady until April 2026, citing persistent high inflation, while Deutsche Bank anticipates cuts could come as early as December.
Concerns over the UK's fiscal discipline, exacerbated by government reshuffles and climbing long-term borrowing costs, have contributed to the volatility in GBP. The long-term gilt yield has reached 5.72%, raising fears about debt sustainability. As investors await the upcoming UK budget announcement, potential tax increases could also impact the pound's performance.
On the Mexican peso (MXN) front, the Bank of Mexico (Banxico) continues to maintain a higher interest rate relative to the U.S. Federal Reserve, which has attracted investment and provided support to the peso. However, trade relations have come into focus with the expiration of a temporary U.S. tariff hike freeze, which analysts predict may lead to a moderate decline in the peso against the dollar over the next year. Evidence of economic weakness is emerging, as recent data indicated a 0.7% decline in Mexico's economic activity year-over-year for February 2025, raising concerns over future growth. Political developments, particularly following the election of Claudia Sheinbaum as president, have prompted fears about potential anti-market reforms that could affect investor confidence.
Analysts suggest that the ongoing economic and fiscal dynamics in both the UK and Mexico will play a crucial role in shaping the GBP to MXN exchange rate in the near term.
