British Pound falls to N1,767 as naira extends gains after CBN rate cut

The British Pound has reached its weakest level against the Nigerian naira since June 26, falling to N1,767 per £1. The Nigerian currency has continued its upward trend despite the Central Bank of Nigeria adjusting its monetary policy stance, lowering the Monetary Policy Rate (MPR) to 23%. The weaker pound is primarily due to stronger monetary buffers, such as foreign exchange reserves exceeding $55 billion and steady inflows from the oil and gas sector.

These factors have bolstered market liquidity, discouraging speculative attacks on the naira. The pound sterling has also depreciated significantly against the naira compared to the first quarter of the year, when it was above the N1,900 per £1 level. Domestic liquidity growth and oversubscribed Treasury bill and Open Market Operations (OMO) auctions have further supported local demand for naira assets.

Looking ahead, the GBP/USD pair is expected to remain bearish, with a potential retest of year-to-date lows near the 1.3140 region. A significant support level is at 1.3100, followed by 1.3000. Meanwhile, the US dollar has shown strength, with the US Dollar Index near a one-and-a-half-year high, supported by low inflation expectations and geopolitical tensions.