Fall in sterling continues to impact big businesses – and their customers

Consumers will likely have to continue to bear the brunt of price increases on a range of products and services due to the depreciation of the British pound, as companies battle to maintain profit margins.

Last week saw electronics company Sonos increase the price of its speakers by 25 percent for UK customers, blaming the fall in the value of sterling following the June 2016 referendum on whether the UK should leave the European Union (EU).

Many other large organisations have been faced with similar problems to that of Sonos. Technology giants Apple and Microsoft have also increased the prices of some products to combat the drop in value of the British pound, with consumers having to fork out hundreds of pounds more in some instances due to the price hikes.

Food companies have also increased the cost of products in the UK, or cautioned that this could be the case, as a way to counterbalance the devaluation of the pound. Brands including Weetabix, Mr Kipling and Freddos have all threatened price increases, with Marmite – owned by Unilever – already upped in price.

Paul Langley, Managing Director of OSTCFX, suggests that where uncertainty exists, currency volatility follows. He claims companies need to be aware of this or continue to be faced with tough decisions on absorbing losses or hiking consumer prices.

“The US dollar to pound sterling exchange rate in particular has been hit hard since the UK voted to leave the EU, which is reflective of the uncertainty we are now faced with surrounding Brexit. This has not been helped by Theresa May suggesting that she intends the UK to make a clear break from the single market,” said Langley.

“Well established global businesses face risk to their reputation when increasing prices for their customers as a result of currency fluctuations. Yet this issue can be avoided through proactive business currency hedging with an FX provider that educates and offers simple yet effective strategies. By adopting this approach a company can protect both its bottom line and reputation,” Langley added.

Send Paul Langley a message.

To learn more about FX risk management
call 01792 720 873 or email info@godi.io

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