The GBP to NGN exchange rate has faced significant downward pressure recently, with the GBP trading at 90-day lows near 1917 NGN, approximately 4.9% below its three-month average of 2016 NGN. The volatility in this pair has been notable, with fluctuations ranging from 1917 to 2082 NGN, reflecting broader economic sentiment.
Market analysts attribute the GBP's decline to heightened budgetary concerns as the UK approaches the autumn budget announcement, where Finance Minister Rachel Reeves has indicated plans for tax increases and spending cuts. These fiscal measures could further weigh on the British economy, prompting speculation about the potential for the Bank of England to cut interest rates again before year-end. As the UK economy struggles with modest growth, indicated by a mere 0.1% increase in August, expectations remain low for any significant recovery in the short term.
On the other side, the Nigerian Naira's outlook is influenced by several factors, including a notable decline in inflation, which fell to 18.02% in September. This decrease has led the Central Bank of Nigeria to lower its benchmark interest rate to 27%, aiming to stimulate economic activity. However, experts warn that the NGN is likely to weaken further due to foreign investors offloading local assets amidst global market volatility and a constrained dollar supply from the central bank.
Additionally, movements in oil prices play a crucial role in shaping the NGN's performance, with recent oil prices hovering around $64.92 per barrel, 2.2% below their three-month average. Given Nigeria's reliance on oil revenues, any sustained downturn in oil prices could exacerbate the challenges facing the naira.
In summary, currency analysts foresee continued pressure on the GBP against the NGN, driven by UK economic uncertainties and impending fiscal measures, while the NGN may experience further depreciation despite easing inflation and monetary policy adjustments, influenced largely by external economic conditions.
