The Nigerian currency fell to the N2135-N2150 bandwidth against a resurging British pound Sterling, which rose to a new high against the greenback.
Currency traders remained slightly cautious as they awaited the Bank of England’s rate decision on Thursday.
The British central bank is widely expected to hold borrowing costs at 4.25% on Thursday, after indicating a slow and measured loosening path following the 25-basis-point cut agreed in May.
UK Monetary Officials stated the rate corridor of 4.25%-4.50% will persist until they assess how the new policies from U.S. President Donald Trump, still looming large, shape inflation and growth domestically. Some warn that Trump’s plans could inflame prices and force their hand later.
The naira outlook lightens up amid higher oil prices and CBN’s FX injection
The CBN injected $580 million into the forex market in May 2025, as part of a bold initiative to stabilize the naira and restore trader confidence.
This action from the Nigerian central bank aligns with its direct sales strategy to authorized banks, which has become a vital tool for managing short-term volatility.
Experts caution that relying on external reserves to support the naira may not be sustainable without a corresponding increase in dollar inflows, even though the intervention helped alleviate fears and maintain some degree of exchange rate stability.
The naira’s stability was attributed to an uptick in foreign portfolio investor inflows, bolstered by the CBN’s proactive market interventions and a reduction in global pressures. The hope for stability has been reaffirmed as international challenges ease and investor interest in Nigeria’s capital markets grows.
The Nigerian naira is headed toward medium-term stability despite its current undervaluation because of recent monetary and economic reforms which increased investor confidence and narrowed the official-parallel market rate differential.
The naira’s prospects in the Nigerian foreign exchange market have improved with the rise in the price of crude oil. This month’s spike in oil prices coincided with increased tensions between Iran and Israel, which is anticipated to support the naira on the exchange market.
Crude oil surged again as the market braced for a potential escalation that could disrupt supplies from a region producing about one-third of the world’s crude following the ongoing conflict between Israel and Iran Given the high level of geopolitical uncertainty and the lack of an extension of the Israel-Iran conflict to the rest of the Middle East, the dollar experienced some declines on Monday.
British pound Sterling holds some cards against the greenback
The dollar’s strength has also been undermined by Donald Trump’s return to the White House and the series of tariffs imposed on U.S. trading partners. Israel triumphed.
The British Sterling climbed higher against the dollar, rising above the 1.36 mark as the Israel-Iran conflict intensified over the weekend and into the new week. In anticipation of the crucial Bank of England (BoE) policy meeting on Thursday, UK consumer inflation figures are set to be released on Wednesday, which is expected to impact the GBP.
Additionally, the greenback will likely be influenced by the U.S. Federal Reserve’s (Fed) interest rate decision on Wednesday, which will also provide significant momentum to the GBP/USD pair.
The British Sterling was earlier facing pressure from bets that the BoE might cut interest rates more sharply than anticipated, supported by data indicating that the UK economy contracted more than expected in April.
Furthermore, the Greenback’s safe-haven status is reinforced by escalating geopolitical tensions in the Middle East, which also serve to limit gains in the GBP/USD pair.
