Finance
Many UK firms say volatile pound triggered losses in 2025, need to hedge grows
Published by Global Banking and Finance Review
Posted on December 11, 2025
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on December 11, 2025
By Amanda Cooper
LONDON, Dec 11 (Reuters) - Nearly half of UK businesses surveyed by FX and cash management solutions provider MillTech say that they have lost money due to a volatile pound and plan to hedge more of their currency risk, and for longer, a report released on Thursday showed.
The report surveyed over 250 chief financial officers and treasurers at UK companies in October about their hedging plans and costs. It showed 48% of those polled said they had lost money as a result of the big swings in sterling's value.
WHY IT’S IMPORTANT
Currency volatility has accelerated this year, as geopolitical uncertainty has picked up and global trade relations have become more unpredictable since U.S. President Donald Trump has pushed to enact his "America First" agenda.
Hedging rates by UK corporates have risen for their third consecutive year to 78%, up from 76% in 2024 and 70% in 2023. Among firms not currently hedging, 68% are now considering doing so in response to market conditions, MillTech's survey showed.
KEY QUOTE
"Most CFOs treat FX like a slow-dripping tap. It’s something they can put off fixing while it’s only a nuisance. But this year, that drip turned into a full-on leak, and many UK firms have been scrambling with towels and buckets," Eric Huttman, chief executive of MillTech, said.
CONTEXT
Sterling hit four-year highs above $1.37 in July against a broadly weak dollar, then fell back as UK fiscal worries weighed on sentiment. It is set for its most volatile year since 2022, LSEG data shows.
BY THE NUMBERS
The mean hedge ratio, or the percentage of companies' foreign exchange exposure that they protect, is at 53%, up from 45% in 2024. Hedges in 2025 cover an average period of 5.52 months, versus 5.55 months in 2024, but well above the 4.04 months in 2023.
(Reporting by Amanda Cooper. Editing by Dhara Ranasinghe and Mark Potter)
Currency volatility refers to the fluctuations in the exchange rate of a currency over time, which can lead to significant financial risks for businesses engaged in international trade.
Hedging is a risk management strategy used by businesses to offset potential losses in investments by taking an opposite position in a related asset, often through financial instruments like options or futures.
A chief financial officer (CFO) is a senior executive responsible for managing the financial actions of a company, including financial planning, risk management, record-keeping, and financial reporting.
The hedge ratio is a measure used in hedging strategies that indicates the proportion of a position that is hedged to mitigate risk, often expressed as a percentage.
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