Global perspectives on FX in 2026

2026 has begun with a sense of déjà vu. The re-emergence of tariffs has once again unsettled global capital markets, triggering sharp currency moves and reinforcing the reality that trade disruption and FX volatility are no longer temporary shocks but recurring features of the financial landscape. 

Heightened volatility in 2025 forced corporates and fund managers to reassess how much currency risk they were willing to carry, weighing the financial impact of sharp FX swings against the rising cost of hedging amid broader cost pressures. For many, the response was a shift towards longer-term protection rather than continued exposure to repeated market shocks.

These dynamics were evident across major currencies. Sterling, for example, surged to a multi-year high against the dollar in the first half of the year as US trade policy weighed on the greenback, only to reverse later as domestic fiscal and macroeconomic concerns came into focus. The dollar also defied expectations, falling sharply after an initial period of strength and highlighting how quickly currency trends can turn.

At the macro level, global growth moderated but remains resilient. Inflation is around it’s central bank target in Europe, yet still elevated in the UK and the US. Meanwhile, rising government debt is becoming a constraint in some regions, and uncertainty around tariffs, politics, and central bank policy is adding to the divergence. This is likely to result in wider dispersion in growth, employment, inflation, and fiscal balances across major economies, driving further volatility across major world currencies.

Looking ahead, volatility in 2026 is likely to resemble 2025. While unexpected market events are always possible, the broader environment is set to be shaped more by structural shifts in macroeconomic forces than by isolated, transient shocks.

In this blog, we explore the key findings from our 2026 Global FX Report, analysing the challenges facing senior finance decision-makers at corporates and fund managers across the UK, North America and Europe, and how they are repositioning to navigate the next phase of currency volatility.

Table of Contents:

• Global Corporate CFO's Perspectives on FX
• Global Fund Manager CFO's Perspectives on FX

 

Global Corporate CFOs Perspectives on FX

Key takeaways:

• 88% of firms globally now hedge FX risk.
• More than half report volatility-linked losses.
• Nearly three-quarters (72%) of corporates saw interest rates or fees increase.
• Automation of manual processes (31%) has become the most critical factor when evaluating FX solutions.
• The top priorities for AI integration across all regions were process automation (42%) and risk identification (40%).

 

88% of corporates globally now hedge their FX risk, up from 81% the previous year, as they seek to protect their bottom lines against geopolitically driven currency volatility.

With 62% of corporates stating their profitability or international competitiveness has been negatively impacted by trade and tariff-induced currency volatility in 2025, geopolitical turbulence is now a defining factor in FX strategy.

North American and European firms were most impacted (69%), while the UK was less affected (48%). Over half (58%) also experienced volatility-driven losses from their FX strategy, and nearly two-thirds (61%) of corporates that don’t hedge now say they would consider doing so due to current market conditions.

This is driving shifts in how corporates hedge, with 62% planning to increase hedge lengths to lock in protection for longer. Meanwhile, 31% are increasing hedge ratios, while 34% plan to decrease them, as corporates balance long-term stability with short-term flexibility.

 

Rising costs for corporates spark efficiency drive

Hedging has become more expensive. Despite an increasing proportion of corporates hedging FX risk, the cost of hedging rose by a mean of 67% globally. North American firms saw the largest cost increases, averaging 76%. UK and EU corporates were less affected, though still significantly so, with hedging costs rising by 66% and 59%, respectively.

15% of corporates globally reported a rise of more than 100%, including one in five North American firms, and just 4% said the cost of hedging did not rise.

Corporates also faced tightening liquidity conditions. Nearly three-quarters (72%) of corporates saw interest rates or fees increase, and 42% saw lending criteria tighten. With firms having less available liquidity and struggling with the increased cost of risk mitigation, corporates are forced to reassess how FX is managed across their business.

 

Manual processes widespread despite influx in AI consideration

Despite rising awareness of operational risk, manual processes are still common in FX workflows. More than one in five (22%) corporates cite manual processes as their biggest challenge in FX operations, rising to 30% in North America.

Legacy modes of communication remain widespread, with 34% of corporates still using phones and 29% using emails to instruct FX transactions. Firms in the UK, in particular, continue to rely heavily on manual instructions, with 40% using phones and 42% using email. In Europe, 34% of respondents use phones and 22% emails, while 29% of North American businesses use phones and 24% emails.

While manual FX instructions were prevalent, digital adoption has started to progress. Every firm surveyed is considering FX automation, and 99% are evaluating AI for their FX operations. The top priorities for AI integration across all regions were process automation (42%), risk identification (40%), and risk management (39%).

“The automation of processes, such as price discovery, execution and reporting, helps corporates create auditable trails that enable them to demonstrate best execution. Altogether, this supports governance and compliance while reducing potential risks from manual errors.”

Tom Hoyle, Head of Corporate Solutions at MillTech

 

Global Fund Manager CFOs' Perspectives on FX

Key takeaways:

• 87% globally now hedge FX risk.
• 77% report losses due to unhedged risk.
• 1 in 2 experienced tighter lending criteria.
• Fragmented service provision was cited as a leading FX challenge by 27% of respondents.
• Price discovery (39%) and end-to-end FX workflows (38%) are the leading automation priorities globally.

 

Nearly four in five fund managers (77%) have suffered losses as a result of unhedged FX risk in the last year. The impact is even more pronounced in Europe, where losses were reported by all respondents (100%), and in the UK, where the figure reached 95%. 

Reflecting this shift, 61% of fund managers globally who do not currently hedge say they are now considering doing so in response to current market conditions.

For the 87% of global fund managers who do currently hedge their FX risk, uncertainty is reshaping their strategies, with nearly half (47%) planning to increase hedge ratios and 45% intending to extend hedge lengths.

The data points to a clear global shift towards stronger and more sustained risk protection, as managers seek to shield a greater proportion of exposure for longer periods. Globally, average hedge ratios currently stand at 48%, while the average hedge length is 5.4 months.

This increase in hedging activity comes despite a 63% rise in global hedging costs, underscoring the extent to which fund managers are prioritising risk management. Cost pressures were most pronounced in the UK, where hedging costs rose by 69%, compared with more moderate increases in Europe (64%) and North America (57%). Notably, more than one in ten respondents (12%) reported a doubling of hedging costs.

 

The top FX challenges for Fund Managers in 2026

Operational complexity continues to be a significant challenge for fund managers. Fragmented service provision was cited as a leading FX issue by 27% of respondents, closely followed by the difficulty of demonstrating best execution at 26%. Managing FX across multiple funds, strategies and jurisdictions further adds to this complexity, placing increasing strain on internal teams.

Regional differences are also evident. In the UK, manual processes were identified as the top operational concern, cited by 27% of fund managers, while EU respondents pointed to limited internal expertise as a key challenge, at 21%.

As time and specialist resources become more constrained, outsourcing has grown in importance. All fund managers surveyed now outsource at least part of their FX processes, highlighting the central role of external providers. The main drivers include improved scalability and flexibility (36%), the ability to focus on core business activities (34%), and access to specialist expertise (33%).

“Managing FX across multiple funds, strategies and jurisdictions has become increasingly complex. Without the right structures in place, operational strain can quickly translate into financial and governance risk.”

Joe McKenna, Head of Institutional Solutions at MillTech

 

Operational complexity drives digitalisation of processes

Manual FX processes remain a significant source of friction for fund managers. Nearly a quarter of respondents globally (24%) identified manual workflows as a key challenge, rising to 30% in North America. As a result, almost all fund managers are now considering automating parts of their FX workflows, with price discovery (39%) and end-to-end FX workflows (38%) as the leading priorities globally.

Use of AI is also accelerating rapidly among fund managers. Almost every manager surveyed (99%) is considering AI in some form. Beyond early adoption, half of fund managers globally (50%) are at least actively exploring how AI can be applied within their FX operations.

As AI and automation become more embedded, they are expected to support better risk identification, improve execution and reporting, and strengthen governance, ultimately simplifying FX processes and helping funds to cut costs more effectively.

Looking to the year ahead, more than a quarter of fund managers now say their preferred FX setup is a digital, multi-bank platform with advanced automation (27%), making it the most popular option.

 

Please refer to our Research Disclosure Page for more information on the data referred to in the above.