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The local currency is currently showing signs of cautious stabilisation against the British pound.

The naira settled at N1,837/£1 at the official market on Wednesday.

Price action suggests that the psychological break below N1,900/£ has boosted naira bulls’ morale, as the naira has held most of its gains against the British pound this year.

CBN reforms have begun to take hold after a period of significant volatility, supported by record-high foreign reserves and aggressive disinflationary measures.

The British pound has recently found a “structural floor,” leading to a sideways consolidation pattern, while the naira showed significant strength earlier in the year.

The pair is presently trading well below its 200-day moving average of N1,915/£, indicating that the long-term trend favours naira strength.

The British pound has somewhat recovered from its 52-week low of N1,804/£ on March 18, suggesting that the aggressive sell-off may be slowing.

Technical charts highlight distinct “battleground” zones where price movement might halt or reverse. The primary resistance lies between N1,860/£ and N1,875/£.

Nigerian banks have raised over N4.6 trillion in new capital following the banking sector recapitalisation deadline.

This exercise has significantly reduced excess naira liquidity that previously contributed to devaluation, alongside the elimination of “Ways and Means” financing, which cut government borrowing by 90%. The British pound faces pressure, while the naira stabilises.

Geopolitical tensions have caused global energy price shocks, keeping Brent crude above $100 a barrel.

While this boosts Nigeria’s income, it also puts inflationary pressure on the UK and may lead the Bank of England to adopt a “stronger for longer” stance.

The British pound maintained its strength during Friday’s North American session, holding above 1.3300, but ended the week with around 0.20 per cent losses versus the US dollar.

The British pound sterling is headed for monthly losses due to risk aversion driven by an energy shock from the Middle East conflict and the US dollar’s safe-haven appeal.

Consequently, sentiment remains weak, with Wall Street reporting losses and the US dollar expected to close the week with gains of over 0.45 per cent, according to the US Dollar Index.

Prime Market Terminal data indicates that the BoE is expected to raise rates by 78 basis points.