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Sterling slam-dunked.

ended 18. May 2026

Sterling is under real pressure ATM and many domestic businesses exposed to the Euro and Dollar will be feeling it, in some cases acutely. How can businesses with international exposure protect themselves, and do enough do so? Have you been contacted by any businesses who have been panicking about recent Sterling weakness, seeking to hedge themselves? And what are your forecasts for Sterling in the months ahead? If the Bank of England hikes rates to deal with higher inflation, will this provide some support to Sterling? All in all, what's happening in the world of forex and UK business? Are nerves growing and bottom lines shrinking due to Sterling weakness?

3 responses from the Newspage community

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Tony Redondo
Founder at Cosmos Currency Exchange
The Pound slumped to a three-week low against the Euro and a five-week low against the US Dollar last week, dropping nearly three and a half cents in the process. This drop is driven by a distinct political risk premium and a sharp gilt market sell-off, despite resilient Q1 GDP data. For exposed SMEs, relying purely on spot markets is destroying margins. Importers face a direct hit to the bottom line, and "hope is not a hedge." Businesses must utilize structural tools to lock in cost certainty and protect cash flow. A forward contract can secure an exchange rate up to 12 months out. Automated stop-loss and limit market orders can track the markets 24/7. With Trump sabre-rattling over Iran again, the Pound to Dollar exchange rate is likely to drop further and test the 1.30 threshold. This time last week, interbank was above 1.36. Proactive hedging is vital. Likewise with the Euro, the ongoing Labour psychodrama at Westminster will continue to weigh on the Pound.
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Paul Denley
CEO at Oakham Wealth Management
Recent commentary on Sterling says more about market nerves than market reality. The Pound has weakened over the last few days, but that needs context - it was weaker against the Dollar and the euro at the beginning of March and in November. This is not a 2022 redux.

That said, currency volatility matters. Businesses importing goods, servicing Dollar debt or paying overseas suppliers can see margins squeezed quickly if unhedged. Larger firms typically protect themselves through forwards, options or natural hedging. Smaller businesses often lack the scale or predictability of cashflow to hedge efficiently, leaving them more exposed to exchange rate swings.

Currency moves have always mattered for internationally exposed businesses, but a weaker Pound is not universally negative. Many FTSE 100 firms earn globally, so overseas revenues can rise in Sterling terms when the currency weakens.
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Prem Raja
Head of Trading Floor at Currencies 4 You
Sterling is under real pressure, down around 1.5% across the board, with Cable now sitting near 1.3360 and GBPEUR back in the 1.14 region. For UK businesses buying in Euros or Dollars, that move can hit margins very quickly, especially where costs are fixed and pricing cannot easily be passed on.

The key is not trying to guess the perfect moment, but having a strategy. Forward contracts, market orders and staged buying can help businesses protect budgets and avoid being forced to buy currency during sharp moves. Too many still leave it until the invoice is due, then panic when the market has already moved.

We have seen a noticeable increase in concern from businesses recently, particularly importers exposed to USD and EUR. Right now, the market is not really pricing in further Bank of England hikes, more just rates staying higher for longer. Whilst a hike would normally be Sterling positive, concerns around weak GDP growth and political uncertainty are counteracting that support.