Forecasts for GBP to NGN
The GBP to NGN exchange rate has reached a 7-day high near 2135, which is approximately 5.0% above its 3-month average of 2033, amid a volatile trading range of 14.5% from 1886 to 2160. Analysts suggest that one of the key drivers behind the recent increase in GBP value against the Nigerian Naira (NGN) may be linked to developments in the U.S.-UK trade relations, especially following U.S. President Donald Trump's announcement of a 10% tariff on UK imports. While this move has generated some uncertainty for GBP, the initiation of a new trade agreement may ultimately support the currency if it fosters greater economic confidence.
The GBP has faced recent challenges, undergoing a slight decline due to profit-taking, as seen after gains spurred by GDP data. The upcoming UK-EU summit adds an element of caution among investors; any lack of progress on trade discussions could dampen the strength of the pound. The mixed signals from both domestic economic indicators and political developments, particularly following Brexit, keep market sentiment around GBP fragile.
In contrast, the NGN is contending with its own set of difficulties, stemming from a cash crunch that occurred in early 2023, exacerbated by the government's currency note changeover aimed at promoting a central bank digital currency. This situation raised tensions and has left many citizens struggling with cash shortages. As newly sworn-in President Tinubu aims for ambitious economic growth, swift reforms and rebuilding business confidence will be essential.
Additionally, fluctuations in oil prices also impact the NGN, with recent data showing that Brent Crude OIL/USD is currently at 65.52, which is 4.5% below its 3-month average of 68.63, within a volatile range of 27.3% from 60.14 to 76.54. Since Nigeria's economy heavily relies on oil exports, any downward trend in oil prices can contribute to further depreciation of the NGN, complicating the broader economic challenges ahead.
Looking forward, forex analysts believe that the outlook for the GBP to NGN exchange rate will depend significantly on multiple factors: progress in UK economic recovery, Bank of England's monetary policy decisions, trade negotiations, as well as stability in the Nigerian economy amidst the search for growth strategies. Consequently, stakeholders engaging in international transactions should remain vigilant regarding economic updates and market trends to optimize currency exchange outcomes.
