Many UK firms say volatile pound triggered losses in 2025, need to hedge grows

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 GBP= 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.