I don’t think Nancy means grace, This name comes from the name Ann. Literally Nancy is a short name for Ann, so back in the past, people used this affectionate phrase called “mine Ann”. This had changed to “my Nan” to pronounce it more easy. During that time people added “Cy” at the end of names so Nan turned into Nancy. And that’s how Ann turned into Nancy.
― Anonymous User 4/28/2022
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NANCY: One of Grace The Lord will give grace and glory: no good thing will he withhold from them that walk uprightly. Psalm 84:116.
In my family, going back as much as 10 generations, Nancy was used as the pet name for women named Agnes. I've always read that it is a diminutive of Ann, but this is my experience. We, by the way, came from Northern Ireland and before that Scotland.