The local currency weakened against the British pound sterling in the last trading session, with the pound at N2,112.8/£1 on the unofficial market. The naira fell below the N2,000/£1 support level, indicating that sellers dominate. Over the past three months, the naira has depreciated against the pound, dollar, and euro despite the CBN’s introduction of the Retail Dutch Auction. Pressure from importers and travelers, combined with a fragile FX market, has exacerbated the situation.
The CBN’s efforts to stabilize the naira face challenges due to low oil production, petrol subsidies, and weak dollar liquidity, even with rising foreign exchange assets.
In the European session on Friday, the GBP/USD pair remained range-bound as investors awaited the US Non-Farm Payrolls (NFP) data for August, which could impact the Fed’s interest rate decisions. The US ADP report showed a 99K increase in employment for August, below the expected 145K and a drop from July’s revised 111K, heightening recession concerns.
The August NFP report, expected to show a 160K increase, will be crucial before the Fed’s September 18 rate decision, where a rate-cutting cycle is anticipated. Market expectations include a 100 basis point reduction from the Fed and a 65 basis point cut from the Bank of England.
