Naira strengthens against Pound as exchange rate holds around N1,800

The naira has maintained its recent gains against the British pound, with the currency pair trading around N1,800 to £1 in the official foreign exchange market, marking one of the strongest levels for the Nigerian currency since late February.

The latest movement extends the naira’s relatively firm performance against sterling over the past few weeks, as the exchange rate has largely remained within the N1,800–N1,850 range.

Market activity, however, has entered a narrower consolidation phase, with the sharp volatility recorded in previous weeks giving way to more balanced two-way foreign exchange flows.

Analysts have identified N1,840 per pound as an immediate resistance level, while a stronger resistance zone is located between N1,880 and N1,900. A sustained break above N1,900 would be required to signal renewed medium-term strength for sterling against the naira.

On the downside, support has emerged around N1,780, with stronger technical support at approximately N1,750. Market watchers believe a sustained defence of these levels could prevent the naira from weakening towards its yearly lows.

The naira’s relative stability has coincided with ongoing measures by the Central Bank of Nigeria (CBN) to improve transparency in foreign exchange price discovery, strengthen market-determined pricing and increase liquidity through official forex channels.

Efforts to address foreign exchange demand pressures and improve the supply of dollars have also helped moderate excess demand in the parallel market while supporting stability in the official spot market.

The interest-rate environment remains an important factor influencing the currency pair, with monetary policy decisions by both the CBN and the Bank of England (BoE) shaping investor sentiment.

The CBN’s tight monetary policy stance, including elevated interest rates aimed at containing domestic inflation, has helped limit naira liquidity and discourage speculative activity and foreign exchange hoarding.

At the same time, sterling’s performance is being influenced by developments in the UK economy, inflation trends and expectations surrounding future BoE monetary policy.

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In the international market, the pound was trading around $1.35 during early European trading on Thursday, supported by a weaker US dollar. Investors are also monitoring comments from BoE Governor Andrew Bailey and the latest US employment data for clues about the direction of global interest rates.

Recent comments from BoE policymaker Catherine Mann pointed to tentative signs of economic growth, including a stabilising labour market, although she noted that inflation remained somewhat higher than previously expected.

Meanwhile, developments in US monetary policy could also influence sterling through movements in the dollar. A more hawkish Federal Reserve stance could strengthen the dollar and put pressure on the pound, while expectations of easier US monetary policy could provide additional support for sterling.

For the naira-pound pair, the near-term outlook remains largely range-bound, with analysts projecting trading within approximately N1,750 to N1,860 per pound in the absence of major macroeconomic shocks.

Movements in crude oil earnings, Nigeria’s foreign exchange reserves, dollar liquidity and future policy decisions by the CBN and BoE are expected to remain key determinants of the exchange rate.

Analysts therefore expect the naira to retain its recent stability against sterling in the near term, although a major shift in oil revenues, foreign exchange supply or global monetary policy could trigger a renewed breakout from the current trading range.