The naira has strengthened to around N1,800 against the British pound in the official foreign exchange market, marking its strongest level against the sterling in about seven months.
The latest movement represents a further appreciation of the Nigerian currency after it traded largely within the N1,800-N1,850 per pound range over the past few weeks.
Recent trading has also shown reduced volatility, with the pound-naira pair settling into a narrower range as buying and selling pressures become more balanced.
Market levels indicate resistance around N1,840 per pound, while stronger resistance is expected between N1,880 and N1,900. On the downside, support is seen around N1,780, with another technical floor near N1,750.
The recent stability has coincided with efforts by the Central Bank of Nigeria (CBN) to improve transparency and price discovery in the official foreign exchange market, while maintaining liquidity through formal FX channels.
Improved management of foreign exchange demand and supply has also helped reduce pressure from the parallel market and contributed to greater stability in the official market.
However, the outlook for the naira remains influenced by monetary policy developments in both Nigeria and the United Kingdom. High interest rates and liquidity management by the CBN continue to affect demand for the naira, while UK inflation, economic performance and Bank of England policy remain important drivers of sterling.
Analysts expect the pound-naira exchange rate to remain largely range-bound in the near term, potentially trading between N1,750 and N1,860 per pound unless significant developments involving crude oil revenues, foreign exchange supply or Bank of England policy alter market conditions.
Meanwhile, the pound was trading near $1.35 against the US dollar in early European trading on Thursday, as investors awaited further signals from the Bank of England and upcoming US economic data.
