Trading GBP/MXN

GBP/MXN is traded in less volume than major currency pairs but still enjoys popularity among forex traders. It is a cross pairing that offers high liquidity and access to the South American market. It also has the potential to increase in value in 2025 after a period of stagnation, making it an attractive addition to investment portfolios. This page will guide you through trading GBP to MXN, including analysing graphs and using pivot points to forecast trades.

GBP/MXN Explained

The GBP to MXN exchange rate represents the value of the Great British Pound versus the Mexican Peso. The GBP is the base currency while the MXN is the counter currency. For forex traders investing in the pair, you are measuring the strength of one against the other.

Why Trade GBP Vs MXN

With so many forex pairs on offer, why should you trade GBP into MXN?

• Growth – Despite stagnating in 2020, the GBP/MXN rate was forecast to increase by 10% in 2021. Trading in a bullish market can also be easier, making it an attractive investment proposition.
• Volatility – Trading MXN to GBP can be a volatile exchange for FX traders. The UK economy is prone to stagflation, which is a mixture of stagnant economic growth and high inflation.
• Liquidity – The MXN ranks eighth in the world for global liquidity behind the USD, EUR, JPY and GBP. High liquidity can reduce the risk of slippage, provide faster execution of orders and tighter bid-offer spreads.
• Prevalence – The GBP is popular and the 4th most traded currency on the global foreign exchange market. It is also considered one of the safest. Its size leads to a wealth of financial data available, which can make MXN/GBP conversions easier to forecast.

Drawbacks & Risks

Despite several benefits to trading the GBP/MXN pair, there are downsides to consider.

Commodity Prices

Mexico is the world’s ninth-largest producer of oil, meaning the country is reliant on its natural resources. The Mexican Peso is therefore tightly correlated to other currencies that are based on its commodities, such as the Colombian Peso and the Brazilian Real.

The interdependence between these currencies makes energy fluctuations more important, and forex traders should take note of any data that moves the markets for natural gas and crude oil. This includes the US Oil Inventory Report, which is released weekly and can have a major impact on the GBP/MXN.

Reliance On The USA

Monetary policy in Mexico is still dependent on the USA. The Banco de Mexico, the nation’s central bank, meets on eight occasions throughout the year to discuss and make changes to monetary policy in the country. These meetings are usually scheduled between 24 and 72 hours after decisions have been announced from the US Federal Reserve. This highlights how important the interdependence between Mexico and the United States still is. It also explains why it’s worth keeping an eye on US announcements when investing in GBP/MXN.

GBP/MXN History

The Mexican Peso was initially based on Spain’s official currency, which is the silver dollar. Its name originated from the 8-real coins that were cast from pure silver, issued by the country of Spain for Mexico. The Peso was the first currency to use a discrete border and accurate weight to prevent counterfeits, which made it very popular.

In the late 18th century, the Mexican Peso was used as a benchmark for all North American countries. In 1785, the USD was valued at a rate similar to the Peso and became widely used as currency in America well after USD bills were introduced. After Mexico gained independence from Spain in 1821, it continued to use the Peso.

Understanding the GBP/MXN history offers important context when forex investing.

Measuring GBP To MXN Rates

There are many top brokers out there where you can buy GBP to MXN with the best exchange rate available.

Before you trade, you first need to look at today’s buying and selling rate. You also need to look at a chart or exchange rate history, as well as the latest economic and political news in both countries. Any political or economic instability can affect the GBP to MXN exchange rate. It can also affect forecasts.

Using Pivot Points When Trading GBP/MXN

Pivot points are used by forex traders as a forecast indicator. They symbolise levels of technical significance. When used alongside other indicators such as support and resistance, pivot points can be an effective investing tool.

Pivot points are calculated using the high, low and close prices of a previous day, week or month.

The three levels of resistance are referred to as R1, R2, and R3. The three levels of support are referred to as S1, S2, and S3.

When the current GBP to MXN exchange rate is trading above the daily pivot point, this is an indication to take a long position. Similarly, when the current exchange rate is trading below the daily pivot point, this serves as an indication to take a short position.

Final Word On Trading GBP/MXN

The GBP to MXN pairing is an attractive choice for forex traders investing in the South American market. High liquidity in both currencies means faster execution of orders, tighter spreads and reduced slippage. But the MXN can be highly influenced by market moves in oil and gas, as well as monetary policy in the US. Checking the latest economic and data releases for each will help you make live trades and forecasts.

Find out more about forex trading.

FAQ