Market News

By Chinwendu Obienyi

British pound weakened against the naira and hovered near its lowest level of the year against the US dollar on Monday as political uncertainty in the United Kingdom rattled investors and weighed on sterling.

The development follows the resignation of UK Prime Minister, Keir Starmer, who faced mounting pressure within the Labour Party after a surprise by-election result in Greater Manchester strengthened the political profile of rival Labour figure Andy Burnham.

Data from the Central Bank of Nigeria (CBN) showed that the naira closed at about N1,806 to the pound sterling, reflecting the combined impact of sterling weakness and Nigeria’s ongoing efforts to stabilise its foreign exchange market.

Sterling came under renewed pressure in international markets, falling as much as 0.4 per cent to $1.3181 during early trading on Monday, close to its 2026 low of $1.3159 recorded in March.

Currency traders cited growing concerns over Britain’s political outlook and uncertainty about future fiscal policy as key drivers of the decline.

Market participants have been closely monitoring developments within the ruling Labour Party amid speculation about Starmer’s political future. Analysts say uncertainty over leadership and economic policy direction has increased caution among investors, particularly at a time when the UK is already grappling with elevated public debt and sluggish economic growth.

>span class="s3">The pound’s weakness comes as the US dollar continues to strengthen globally. The US Dollar Index (DXY), which tracks the greenback against a basket of major currencies, remained above the 101-point mark after reaching a 13-month high. The rally has been supported by expectations that the US Federal Reserve could maintain a tighter monetary policy stance for longer than previously anticipated.

While global investors have been focused on developments in the UK and the United States, Nigeria’s foreign exchange market has continued to benefit from reforms introduced by the CBN.

Analysts say higher yields on government securities have encouraged institutional investors to channel funds into Nigeria’s financial markets, supporting liquidity and strengthening the naira’s position against major international currencies.

Economic observers note that the combination of tighter monetary conditions, improved foreign exchange liquidity and stronger reserves has enhanced investor confidence in the naira despite persistent global economic uncertainties.

Meanwhile, geopolitical tensions in the Middle East continue to influence investor sentiment worldwide. Although markets initially welcomed signs of de-escalation following diplomatic engagements involving the United States and Iran, fresh concerns emerged after reports of renewed exchanges involving Israel and Hezbollah, prompting investors to remain cautious.

For now, analysts expect the pound to remain under pressure as traders assess political developments in the UK, while the naira’s near-term outlook is likely to be shaped by the CBN’s ability to sustain foreign exchange market stability and attract continued capital inflows.