The British Pound marginally depreciated toward the N1,935 support level at the official market and N1,950 at the unofficial market during the mid-week trading session.
CBN data showed it settled at N1,931 on Wednesday, with intraday trading fluctuating between N1,924 and N1,933 against the British Pound.
Foreign exchange rates traded slightly higher at the unofficial market, around N1,950/£, influenced by retail demand and liquidity.
Seasonal factors and economic indicators, such as increased holiday demand for foreign currency in Nigeria, are expected to exert modest upward pressure on the British pound-naira pair soon.
This may drive rates toward N1,950–1,975/£ by the end of the month for imports, travel, and tuition payments. Analysts forecast an average rate of about N1,949–N2,021/£ regarding the British pound sterling, with potential highs above N2,000/£ if pressures on the Nigerian naira persist, caused by limited FX inflows or import surges.
Some models suggest a bullish Pound Sterling could weaken by 20 per cent to about 2,300/£, but baseline projections indicate that the GBP will gradually strengthen given the UK’s growth prospects.
However, the fundamentals of the Nigerian currency show some promising long-term prospects after Nigeria’s export industry demonstrated encouraging growth in 2024, with total exports expressed in naira rising to N77.4 trillion from N36 trillion in 2023.
The growth highlights the nation’s resilience and potential to increase trade throughout Africa and beyond, even though difficulties still exist in key international markets.
Non-oil sectors are showing impressive gains that could eventually improve Nigeria’s standing in international trade, according to data from the International Trade Centre (ITC) while dollar-denominated export earnings decreased slightly to $57.9 billion from $60.65 billion in 2023.
One notable performer was cocoa exports, which increased dramatically from $759 million in 2023 to $2.6 billion in 2024.
Nigeria’s ability to diversify its export base beyond crude oil is demonstrated by the notable increase in ores and residues, which reached $824.4 million.
Pound Sterling bolstered by favorable British Budget
The British Pound has shown resilience in recent weeks, bolstered by a favorable UK budget announcement and diverging monetary policy expectations between the Bank of England (BoE) and the US Federal Reserve (Fed).
The British pound trades at approximately 1.333 against the U.S dollar, marking a 1.46% gain over the past month.
This follows a strong weekly performance, with sterling posting its best week in over three months amid a weaker US Dollar. However, upcoming BoE and Fed decisions could introduce volatility, with markets pricing in a 25-basis-point BoE cut this month while the Fed’s easing path appears more aggressive.
UK Budget Impact: Chancellor Rachel Reeves’ November budget raised £26 billion in taxes to address fiscal gaps, signaling disciplined borrowing and averting deeper deficits. This has supported sterling, though political scrutiny over pre-budget claims could weigh sentiment if it escalates.
Revised UK services PMI data (up to 51.3) indicates expansion, but slowing activity and falling employment highlight fragility. Inflation eased to its lowest since January 2021, reinforcing BoE interest rate cut bets.
The greenback has slid against majors, with markets fully pricing a Fed rate cut next week and at least two more in 2026. This has fueled GBP gains, although Trump’s tariff threats could reverse the U.S dollar’s softening.
Risk-off flows haven’t boosted the greenback as a haven, aiding the British pound, with traders noting bullish momentum toward $1.3370–1.3400. Dips are seen as buying opportunities unless support at $1.3265 breaks.
Do you know the meaning of the word ‘plunge’? It should not be used on the same scenario as marginal depreciation. You may try some other words, unless you did it as clickbait. The Naira by the way is showing strong resilience in this festive season as against speculative naysayers.