For the first time since February, the naira is flexing some serious muscle against sterling. Is this the start of a proper comeback?

In a move that has caught a lot of currency traders off guard, the naira has strengthened to around N1,800/£ against the British Pound in the official market - its strongest showing in seven months.

According to data tracked by cbinews.tv, the Nigerian currency has been quietly holding its own in recent weeks, largely trading within that N1,800 to N1,850 band. After all the wild swings we saw earlier in the year, things have finally calmed down into what analysts are calling a "range-bound consolidation". In plain English? Less panic, more two-way trading.

So, what are the levels to watch?

Traders are eyeing N1,840/£ as the first resistance, with a much tougher ceiling sitting between N1,880 and N1,900. Sterling would need to break above N1,900 to really start calling the shots again. On the flip side, the naira has solid support around N1,780, with a stronger floor at N1,750. If those levels hold, we are unlikely to see a retest of the yearly lows where we briefly saw the pound flirt with N2,200+ back in early 2024.

Why is this happening? Some proper background

This isn't just luck. This is textbook CBN playbook.

Since the unification of the FX windows in mid-2023 and the clearance of over $7 billion in verified FX backlogs last year, the Central Bank of Nigeria (CBN) under Governor Olayemi Cardoso has been pushing hard for transparency, willing-buyer willing-seller pricing, and targeted liquidity injections.

Remember, just a year ago, the gap between the official and parallel market was as wide as N400. Now, that arbitrage has narrowed significantly, which has helped kill off speculative hoarding - one of the biggest drivers of naira weakness.

There is also the interest rate tug-of-war. The CBN has held its Monetary Policy Rate at a punishingly high 27.5% to tame inflation which, though down from its 34% peak in 2024, is still sticky. Over in the UK, the Bank of England has kept rates elevated at 4.25% after its own inflation battle. High rates on both sides mean investors are watching both central banks like hawks.

Historically, the GBP/NGN pair has been incredibly volatile. In February 2024, sterling traded above N2,100 as Nigeria faced its worst FX crisis in decades following the oil price slump and low reserves. The fact we are now talking about N1,800 - a near 15% recovery from those lows - shows how far sentiment has shifted since reserves climbed back above $39 billion in mid-2025.

Looking ahead, analysts expect more of this sideways action. Barring any major oil price shock or a surprise move from Threadneedle Street, the pair will likely stay between N1,750 and N1,860 for the next few weeks, cbinews.tv reports.

Meanwhile, what is the Pound doing globally?

Sterling itself is actually having a decent week globally, holding firm above the $1.35 mark against the US Dollar in early European trading.

The market is in wait-and-see mode ahead of Bank of England Governor Andrew Bailey's speech and the big US jobs report due on Friday.

In the US, comments from the Federal Reserve at Jackson Hole have left traders confused - with some pricing in a potential shift in policy as the Fed tries to balance getting inflation back to its 2% target without choking growth.

Back in Blighty, BoE policymaker Catherine Mann noted that the UK labour market has stabilised and growth is tentatively picking up, though inflation came in a touch hotter than expected. Markets are currently pricing in that the Bank of England is done with hiking for now, which is keeping sterling relatively steady.

Political noise, which used to batter the pound, has also gone quiet, giving traders little to panic about on the domestic front.

Bottom line: The naira's move to N1,800/£ is less about sterling being weak and more about the CBN's reforms finally finding some traction. Whether it can hold below N1,800 will be the real test.

Source: cbinews.tv

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