Sterling Fall Continues To Hurt UK Companies

Sterling’s sharp fall against the U.S. dollar and Euro since June’s Brexit vote has so far hurt almost as many exporters as it has aided, the British Chambers of Commerce said this morning.

A cheaper currency normally helps exporters in the medium term, but the BCC said that currency weakness was proving a double-edged sword for its members, mostly small and medium-sized businesses.

Some 25 percent of businesses said sterling’s weakness had boosted their export margins, but 22 percent said it had reduced the profitability of their overseas sales.

Nearly half of the companies surveyed did not manage currency risk, and had no plans to do so.

Many smaller businesses billed overseas customers in sterling but paid for some of their raw materials in foreign currency, the BCC said, leaving them exposed to the costs of sterling’s fall unless they put up prices.

Sterling has fallen more than 15 percent against the dollar since June 23, and other business surveys have reported a big increase export orders – but any gains have not yet shown up in Britain’s official trade data.

The effects for businesses’ domestic profit margins was clear, with 44 percent reporting a fall. More than two thirds of firms expect sterling weakness to increase their costs in 2017, and more than half expect to pass at least some of this on to their customers.

The Bank of England expects consumer price inflation to rise sharply this year due to firms passing on higher import costs, and to reach 2.7 percent by the end of this year, up from 1.6 percent at the end of 2016.

If you have a business where you are buying or selling currency call us now for our analysis for the year ahead and we can together help mitigate your foreign exchange exposure.

Leave a Reply

Your email address will not be published.

What's Going On?

Currencies 4 You Ltd is a company registered in England and Wales (registered no. 06866898). Registered office: Regus House Victory Way Admirals Park, Crossway, Dartford, Kent, DA2 6QD. Currencies 4 You Ltd Payment and for clients based in the United Kingdom and rest of the world, payment services for Currencies4you are provided by The Currency Cloud Limited. Registered in England and Wales No. 06323311. Registered Office: Stewardship Building 1st Floor, 12 Steward Street London E1 6FQ. The Currency Cloud Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 for the issuing of electronic money (FRN: 900199).For clients based in the European Economic Area, payment services for Currencies4you are provided by CurrencyCloud B.V.. Registered in the Netherlands No. 72186178. Registered Office: Nieuwezijds Voorburgwal 296 - 298, Mindspace Nieuwezijds Office 001 Amsterdam. CurrencyCloud B.V. is authorised by the DNB under the Wet op het financieel toezicht to carry out the business of an electronic-money institution (Relation Number: R142701). For clients based in the United States, payment services for Currencies4you are provided by The Currency Cloud Inc. which operates in partnership with Community Federal Savings Bank (CFSB) to facilitate payments in all 50 states in the US. CFSB is registered with the Federal Deposit Insurance Corporation (FDIC Certificate# 57129). The Currency Cloud Inc is registered with FinCEN and authorised in 39 states to transmit money (MSB Registration Number: 31000206794359). Registered Office: 104 5th Avenue, 20th Floor, New York, NY 10011. Payment Services are provided by Equals Connect Limited, registered in England and Wales (registered no. 07131446). Registered Office: Vintners’ Place, 68 Upper Thames St, London, EC4V 3BJ. Equals Connect Limited are authorised by the Financial Conduct Authority to provide payment services (FRN: 671508). Payment services for Currencies 4 You Ltd are provided by Sciopay Ltd. Sciopay Ltd is a company incorporated in England & Wales. Registration No: 12352935. Sciopay Ltd is licensed and regulated by HMRC as a Money Service Business (MSB). Licence No: XCML00000151326. Sciopay Ltd is authorised by the Financial Conduct Authority as an Authorised Payment Institution. Firm Reference Number: 927951. Currencies 4 you's payment and foreign currency exchange services are provided by Global Currency Exchange Network Ltd T/A GC Partners. Global Currency Exchange Network Ltd is authorised by the FCA under the Payment Services Regulations, 2017 (FRN: 504346). Registered as a Money Services Business, regulated by HM Revenue & Customs ("HMRC") under the Money Laundering Regulations 2017. (Registration number is 12137189). Registered in England and Wales. Company number 04675786. Registered Office 3rd Floor 100 New Bond Street, London, England, W1S 1SP. | Terms and Conditions | Privacy Statement | Careers