Forex experts issue warning to UK businesses as major currencies move like ‘exotics’ since Trump win

Forex experts have warned UK businesses that, since Trump and tariff wars, the type of rate swings you normally see with “exotic” currencies have been happening with major currencies — and many firms are increasingly exposed as a result.

Around 80% of UK firms with international exposure, they say, often under-hedge or skip it entirely, either due to a lack of resources or awareness.

One said: “2025 is shaping up to be the year of the hedge. Or at least it should be given that already frantic forex markets have become even more volatile with the new Trump administration, the war in Ukraine and other geopolitical events.”

Another said, “The proliferation of complex FX Options and the bonus-driven culture in FX dealing rooms is partly to blame. Simple is often best, especially now Trump is back.”

Tony Redondo, Founder at Cosmos Currency Exchange said, “Since Trump and tariff wars, the type of rate swings you normally see with “exotic” currencies have been happening with major currencies.

“UK businesses need to wake up as this increased volatility is a serious threat to their margins. Currency hedging is an insurance, not speculation, yet circa 80% of UK SMEs with international exposure often under-hedge or skip it entirely, either due to a lack of resources or awareness.

“I’ve seen countless horror stories: an unhedged exporter who lost £31k when GBP/EUR strengthened from 1.16 in August 2024 to 1.21 by December; an importer stuck in a fixed forward paid penalties to exit early; another exporter saw margins wiped out when GBP/USD rose from 1.26 in June to 1.34 in September.

“That was before Trump. Now it’s worse. The main mistakes are not hedging, overusing rigid forwards, poor exposure tracking and no flexibility. Fixes are assessing risks, using flexible forward contracts, consulting specialists, monitoring markets and educating staff.”

Prem Raja, Head of Trading Floor at Currencies 4 You said, “2025 is shaping up to be the year of the hedge. Or at least it should be given that already frantic forex markets have become even more volatile with the new Trump administration, the war in Ukraine and other geopolitical events.

“Currency management is something that all businesses who have international exposure should be looking into. However, after 16 years in the business I have found that many still opt to do nothing and leave things to chance. Time and time again I have seen a failure to hedge turn into losses on the balance sheet or, even worse, company closure. Currency hedging isn’t just about things like forward contracts. It is about knowing your margins, knowing the exchange rates that keep you in budget, and then protecting them.

“You don’t need to be a massive conglomerate to take advantage of simple tools like this to protect your business, you just need a regulated FX company that can guide you in these scenarios.”

Harry Mills, Director at forex experts, Oku Markets, added, “I’ve worked with thousands of businesses across a 15-year career in currency management. I’ve seen FDs and CFOs sacked, businesses turn from profit to loss, and had people cry on the phone to me because they messed up their FX (one of which was on EU Referendum day).

“I remember seeing a client’s name on Bloomberg TV back in 2016 as they’d purchased a string of highly speculative and ultimately damaging transactions from another broker. The FD was shamed into saying he “lacked the expertise” as they claimed miselling. I also remember a major soft fruit importer completely underestimating its currency risk and belligerently refusing advice, resulting in a loss.

“Most examples I can recall involve an MD or FD who thinks they understand the market and trades sophisticated derivatives contracts, gambling with their company’s money. The proliferation of complex FX Options and the bonus-driven culture in FX dealing rooms is partly to blame. Simple is often best, especially now Trump is back.”