Why 2026 planning needs a harder look at GBP

By George Powell, Head of Sales

As we head into 2026, many businesses are starting to revisit their budget levels, and rightly so. The FX landscape is shifting fast, and GBP is caught in the crosswinds of global politics, domestic economic pressure, and Eurozone uncertainty.

If you’re setting FX budget rates for the year ahead, here are three macro drivers you’ll want to keep a close eye on.

1. Trump vs The Fed: A battle over the dollar

The tension between Donald Trump and Federal Reserve Chair Jerome Powell is more than political theatre - it’s a potential catalyst for currency volatility. Trump appears to favour a weaker dollar, and if pressure mounts on the Fed to cut rates more aggressively, we could see USD soften against most G10 currencies.

For UK businesses buying in USD or pricing exports in dollars, this could open up short-term opportunities, but it also adds uncertainty. If your budget rate assumes a stable USD, it might be time to revisit that assumption.

2. UK growth: Sluggish, stretched, and under pressure

The UK economy is facing a tough mix: persistent inflation, a softening job market, fiscal tightening, and global trade headwinds. If the Bank of England responds with rate cuts to stimulate growth, GBP could weaken further.

This matters for any business with euro or dollar-denominated costs. A weaker pound means those costs rise in real terms. If you haven’t locked in your FX budget rate, or if it’s based on optimistic assumptions, this could hit your margins hard.

3. Eurozone: Stable, but vulnerable

The Eurozone is walking a tightrope. Growth is modest, inflation is near target, and defence spending is rising - especially in Germany. But geopolitical tensions and global tariff risks could shift the balance quickly.

For UK businesses trading with Europe, this means the GBP/EUR rate could be more volatile than it looks. Budgeting at a static rate might feel safe, but it could leave you exposed if the euro strengthens or the pound slips.

So, what can you do?

If you’re setting FX budget rates for 2026, now’s the time to take a more strategic approach. That means:

• Reviewing your exposure across currencies and timelines
• Aligning your budget rate with realistic market scenarios
• Considering hedging tools, like forward contracts, to lock in rate
• Building in flexibility for worst-case outcomes

We’ve got a comprehensive guide to help you do just that. It introduces basic principles and advanced strategies, with a practical example and a step-by-step framework.

George is Head of Sales for Technology and Healthcare at Moneycorp. With a strong background in FX risk management and international payments, he works closely with SMEs and mid-cap clients across sectors including biotech, digital health, media, and software. George brings a consultative approach to helping businesses manage currency exposure and optimise cross-border transactions, delivering tailored FX solutions that support growth and stability in fast-moving industries.

*Hedging Solutions may help offset the potential risk of foreign exchange rate fluctuations which could result in losses in upcoming expenses for goods, services, or direct investments via Moneycorp. To hedge your business' balance sheet exposure, additional products and services are provided by our Moneycorp Financial Risk Management Limited business.

Views expressed in this commentary are those of the author, and may differ from your appointed Moneycorp representative. This commentary does not constitute financial advice. All rates are sourced from Bloomberg and forecasts are taken from Forex Factory. 

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