The Nigerian naira strengthened against the British pound in the first half of May, appreciating to about N1,853/£1 as political uncertainty in the United Kingdom weighed heavily on sterling.
Data from the Central Bank of Nigeria (CBN) showed the naira traded around N1,853/£1 on Thursday, improving from N1,882.9/£1 recorded on Monday in the official foreign exchange market.
The recovery comes as the British pound slipped to monthly lows following mounting pressure on UK Prime Minister Keir Starmer after fresh cracks emerged within the ruling Labour Party.
The latest political tension intensified after Manchester Mayor Andy Burnham reportedly positioned himself as a possible challenger to Starmer, raising concerns over the stability of the UK government and its fiscal management plans.
Currency traders said the naira has largely remained within the N1,825–N1,950/£1 range in recent weeks, supported by the CBN’s tight liquidity management measures and improving investor sentiment.
Analysts also attributed the naira’s relative stability to the CBN’s benchmark monetary policy rate of 26.5 per cent, which continues to attract carry-trade inflows and support demand for naira-denominated assets.
Nigeria’s external reserves, which have stabilised around $48 billion, are also seen as giving the apex bank enough room to intervene in the market and curb excessive exchange rate volatility.
However, strong demand for foreign currencies by importers and parents paying overseas tuition fees continues to sustain pressure on the forex market, leaving a wide gap between official and parallel market rates.
Nigeria’s forex outlook has also received support from elevated crude oil prices, with Nigerian crude trading above $100 per barrel in May 2026, although domestic production constraints continue to limit the full gains from higher oil prices.
Meanwhile, the British pound extended losses for a fifth consecutive trading session on Friday, falling 0.4 per cent to $1.3356 and heading for its worst weekly performance since November 2024.
The sell-off deepened after Labour Party setbacks in recent local elections triggered renewed calls for Starmer’s resignation, further unsettling investors in UK government bonds.
Market concerns have also centred on rising UK borrowing costs, with yields on 30-year gilts hovering near 5.7 per cent — significantly above levels seen across much of Europe and other advanced economies.
Adding to investor anxiety, the Bank of England retained its benchmark interest rate at 3.75 per cent, while Governor Andrew Bailey warned that persistent energy price shocks linked to tensions in the Middle East could force tighter monetary policy to contain inflation.
