• The Mexican Peso edges lower as traders opt to cover their longs following the recent rally. 
• An easing in market risk has helped the Peso recover, as does stubbornly high inflation expectations in Mexico. 
• The Pound Sterling is rising the most against the Peso on Friday after strong UK data. 

The Mexican Peso (MXN) is edging lower in its key pairs on Friday as traders take profit from their recent longs. This comes after the Peso gained almost 2.5% in recent days following a turnaround in risk sentiment which has aided emerging market FX. 

Lower interest rates are normally negative for a currency as they attract less foreign capital inflows. Although the Banco de Mexico (Banxico) is expected to continue cutting interest rates, the MXN has held its value relatively well due to both the high starting level of its interest rates (over 10%) and the view that stubbornly high inflation could make future cuts more gradual than expected.