07:41 AM EDT, 09/20/2024 (MT Newswires) -- Mexico's central bank delivered a rate cut in August, even against

significant pressure on the peso (MNX), noted UBS.

This points to Banxico's focus on the slowing economy, in the bank's view.

With the peso having recovered after briefly exceeding USDMXN 20, UBS thinks Banxico will deliver another 25-basis-point cut next week -- the current policy rate is 10.75%. The peso retains a sizable carry advantage over the US dollar (USD), but for now, the bank believes the domestic reform outlook and the upcoming United States presidential election will remain the more prevalent drivers.

UBS looks for opportunities to sell the upside in USDMXN around levels of 20.5 over a six-month horizon.