UK Exporters Gambling On Clinton Victory Could Lose £34.6bn Should Trump Win

It's suggested a win for Trump could be problematic for firms who trade in dollars, as the US currency could strengthen against a volatile pound

UK Exporters Gambling On Clinton Victory Could Lose £34.6bn Should Trump Win

UK small businesses that have gambled on a Hillary Clinton victory in this week’s US presidential election are exposing themselves to a £34.6bn currency risk, according to World First.

The Global Trade Barometer, which surveyed 679 UK small businesses, has suggested a shock win for Donald Trump could be problematic for some UK exporters as the safe haven currency, paired with volatile sterling, could leave those who have gambled on a Clinton victory in a “difficult position”.

28% of UK firms currently trade in US dollars and businesses who buy in US dollars have shortened the length of their forward contracts significantly, dropping from an average of 90 working days per contract to less than 70 days – a decrease of over 22%.

With parallels being drawn between the US election and Brexit, foreign currency trading has picked up over the last quarter with both the Euro and the Dollar bouncing back.

37% of businesses surveyed identified the Euro as the most common currency they traded with this quarter, compared to 30% in the second quarter of this year.

Jeremy Cook, chief economist at World First, said:

“The ramifications of small businesses not hedging forward the dollar for a greater period of time could be significant in the early months of 2017.

“As we’ve seen in the aftermath of the UK’s vote to leave the EU, many businesses who left themselves unhedged by gambling on a Remain vote were caught out by the surprise result – these businesses should take heed and make sure they don’t make the same mistake twice.”

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