A new survey reveals that nearly half of UK businesses have suffered financial losses due to extreme volatility in the British pound this year, prompting a significant shift toward more aggressive and longer-term currency hedging strategies.

Key Findings from MillTech's Report:

• Financial Impact: 48% of surveyed CFOs and treasurers reported losing money due to sharp swings in sterling's value.
• Hedging Adoption: The percentage of UK corporates hedging their currency exposure has risen for the third consecutive year, reaching 78% in 2025 (up from 76% in 2024).
• Future Intentions: Among firms not currently hedging, 68% are now considering it due to current market conditions.
• Hedge Ratio & Duration: The mean hedge ratio (percentage of FX exposure protected) has jumped to 53%, up from 45% in 2024. The average hedge duration remains elevated at 5.52 months, well above the 2023 average of 4.04 months.

Context: A Year of Extreme Volatility
Sterling has experienced its most volatile year since 2022, according to LSEG data. The currency soared to four-year highs above $1.37 in July against a weak U.S. dollar, only to retreat later on concerns over UK fiscal policy. This instability has been exacerbated by geopolitical uncertainty and unpredictable global trade relations under the Trump administration's "America First" agenda.

Executive Insight:
Eric Huttman, CEO of MillTech, characterized the shift in corporate mindset: “Most CFOs treat FX like a slow-dripping tap… But this year, that drip turned into a full-on leak, and many UK firms have been scrambling with towels and buckets.”

Why It Matters:
The data underscores a fundamental change in corporate risk management. Businesses are no longer viewing currency volatility as a mere nuisance but as a direct threat to profitability, leading them to lock in exchange rates for longer periods and cover a greater portion of their exposure. This trend is likely to persist as global economic and political uncertainty continues.