Naira slips to N1,855/£ as British pound strengthens

The Nigerian Naira marginally depreciated against the British pound on both the Nigerian Foreign Exchange Market (NFEM) and the parallel market amid a strong rebound from the British pound sterling in the global foreign market.

The pound Sterling was exchanged at around N1,855/£1 at the opening of today’s trading on the official segment of NFEM (based on cross rate against US Dollar) from N1,849/£1 at its prior trade session.

The rate in the official segment has oscillated consistently around the N1,825/£1 -N1,890/£1 range.

In addition, the local currency currently exchanges for the US Dollar at a rate between N1,375/$ and N1,380/$ on the official market.

Latest market fundamentals highlighted that the Central Bank of Nigeria’s managed float system has been active through frequent FX interventions in a bid to curb local FX market volatility. Nigeria’s foreign External Reserves continued to trend higher, above $51 billion, thus providing support for a bullish naira outlook.

IMF comments recently stated that while it is appreciating against the US dollar, the currency is technically undervalued by 25.6%.

However, Dangote Petroleum Refinery started selling to local retailers priced in US Dollars due to issues with its local “naira-for-crude” supply. This is likely to lead to greater commercial demand for Dollars, potentially creating some longer-term downward pressure on the Naira’s purchasing power.

Political turbulence has been a factor of late, most notably with Prime Minister Keir Starmer’s resignation early in 2026; however, the impact has not been of much substance, as underlying yield support has provided ample backing.

BoE is positioned aggressively relative to its other G7 counterparts, where BoE’s key policy rate remains on hold at 3.75%. CPI remains above 3% and has proved stubbornly persistent owing to continued pressures in energy and service price rises. That, coupled with the relatively steady BoE rate, is a supportive floor under Sterling relative to its global counterparts.UK economic growth remains in a range around 1.0% to 1.2% per annum.

British pound posts gains against the Greenback

The British pound sterling eyes a two-day gain and sticks near 1.34 in Wednesday’s London session as the American Dollar remains weak in the wake of a soft US CPI.

The US Consumer Price Index (CPI) inflation softened to 3.5% on a year-on-year basis in June. It fell from the 4.2% peak seen in May, a 3-year high, and was also below the consensus of 3.8%. Headline CPI actually fell 0.4% month-over-month in June, against 0.5% growth seen in May.

• British sterling also rallied north amid inflation concerns from rising energy prices triggered by Mideast tension, prompting markets to price in aggressive Bank of England rate hikes. Markets are pricing in the increased probability of two hikes in 2026, with a September hike priced in.
• The British Pound is boosted by concerns that the escalation of Middle East tensions adds fuel to inflation via energy prices, making the BoE tighten policy. The rise of tensions in the Hormuz also fuels oil price volatility and may keep the higher Fed rate, since higher oil prices raise concerns about inflation, and interest rates could stick around longer.
• Any downward move of the Greenback will likely be contained as safe-haven flows continue to find support amid escalating tensions between the US and Iran.

However, the downside in the Greenback could be limited, thanks to the safe-haven demand picking up as tensions simmer again between the US and Iran. Iran’s involvement in the Hormuz flare-up escalates oil prices and sparks inflation concerns, prolonging higher interest rates from the Federal Reserve. According to the CME FedWatch Tool, markets are now pricing in a roughly 50% chance of a Fed rate hike in September.