The GBP/MXN currency pair hovered above a 19-month low of 23.1805 on Thursday, as easing labor market conditions and softer inflation in the United Kingdom have bolstered the likelihood that the Bank of England will deliver additional interest rate cuts later this year.
The UK Consumer Price Index rose 3.0% year-on-year in January, down from 3.4% YoY in December. It has been the lowest inflation rate since March 2025 and came in line with market consensus.
Core CPI increased 3.1% year-on-year in January, compared to 3.2% in the prior month, also in line with expectations.
At the same time, UK wage growth has been the slowest since the three months to January 2022. Regular pay, excluding bonuses, increased 4.2% year-on-year to GBP 691 per week in the three months to December, slowing from a 4.4% surge in the preceding period.
And, the UK unemployment rate went up to 5.2% in the three months to December from 5.1% in the previous period.
The data added to the case for further policy easing by the Bank of England. According to Reuters, interest rate futures were pricing in nearly 90% odds of a March rate cut by the BoE, compared to 80% before the data.
Market players will also be looking into the minutes from the Mexican central bank’s February meeting due later today.
Banco de México left its key policy rate without change at 7% at its February 5th meeting, following 12 consecutive rate cuts in an easing cycle that began in March 2024.
The GBP/MXN currency pair was last up 0.16% on the day to trade at 23.2238.
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