GBP/MXN settles above 2-month low, posts weekly loss

The GBP/MXN currency pair settled above recent low of 25.6523, its weakest level since March 14th, in the wake of the Mexican central bank’s policy decision and the latest GDP growth data out of the UK.

Banco de México lowered its key policy rate by 50 basis points to 8.50% at its May meeting, since Mexico’s annual inflation slowed to 3.93% in April, while the local economy grew 0.2% quarter-on-quarter in Q1 of 2025 following earlier weakness.

The central bank indicated that it could continue with similar 50 bps reductions, as the disinflation process is expected to allow some further monetary easing.

Still, Banco de México said it would proceed with caution amid elevated global uncertainty (ranging from trade tensions to geopolitical conflicts), which could either reignite inflation through Peso depreciation or lead to deeper economic slowdown.

At the same time, the UK posted stronger-than-expected economic growth in the first quarter of 2025, 0.7%, compared to analysts’ forecasts of 0.6%. This followed a 0.1% growth in Q4 of 2024.

In annual terms, UK’s GDP grew 1.3% in the first three months of 2025, edging past the 1.2% projection. Yet, it slowed from the 1.5% increase seen in the previous quarter.

In addition, March’s monthly GDP growth was 0.2%, while economists had expected a flat reading.

Still, the global impact of the Trump administration’s trade war and British businesses warning of a hit from a raise in UK employment taxes could hamper the outlook.

The GBP/MXN currency pair settled 0.34% lower at 25.8486 on Friday.

The exotic Forex pair lost 0.07% for the week.