Why finance directors wait for a better rate
Somewhere in the Midlands there is a finance director who has spent nine months not buying euros, waiting for a better rate. On 16 October he got one. The pound bought 1.1866 euros that day, the best it has managed all year on the Bank of England's own series. I would put money on him still waiting.
"We'll wait for a better rate" is a trade. You have just not written it down.
Nobody asks about the money you lost by doing nothing
That asymmetry explains more corporate FX behaviour than any amount of market analysis. Cover half your euro exposure at 1.17, watch the rate trade at 1.1866 six months later, and somebody at the board table wants a word about the hedge that cost money. Leave it uncovered, lose the identical amount, and the question never arrives. One of those outcomes has your name on it. The other is just the weather.
Which is how you get the second quarter of 2026. MillTech's Corporate Hedging Monitor, published on 25 August 2026, put the average corporate hedge ratio at 46 per cent and the average hedge length at 5.7 months, which it calls a series low. CTMfile's write-up of the same survey on 18 September 2026 has UK firms down from 58 to 45 per cent cover, and 88 per cent of the 285 senior finance people polled reporting a loss on an unhedged exposure. They were hurt by not hedging, and the collective response was to hedge less.
Samuelson and Zeckhauser named the underlying reflex in 1988, in Status Quo Bias in Decision Making (Journal of Risk and Uncertainty, volume 1): people disproportionately stick with whatever they are already doing. In a finance function the bias gets an accomplice, because the scoreboard only records one kind of mistake.
What it costs to wait for a better rate
More than most finance teams think, because the range is wider than it feels from inside a single quarter. The euro rate ran from 1.1386 on 27 February to 1.1866 on 16 October, 480 points or 4.22 per cent (Bank of England daily spot rates, series XUDLERS, read on 19 October 2026). On a business buying two million euros of supply a year that is roughly GBP 71,000 between the two ends, illustrative and before anybody's margin. Nobody in February knew which end they were standing at. Nobody today knows either.
Which would be fine if waiting were a view. It isn't. Asked what they would do if interest rates rose, 52 per cent of that same survey said they would increase their hedge ratio and 34 per cent said they would cut it. Same question, same information, opposite answers.
You can hardly blame them, because the people paid to hold the view don't hold one either. On 17 September the Bank of England's Monetary Policy Committee voted six to three to keep Bank Rate at 3.75 per cent, and the minutes hedge in both directions. Alan Taylor noted that evidence of second-round effects "would build the case for tightening" and, in the next sentence, that if geopolitical tensions abate "an easing of policy should be in sight". Nine economists with full access to the data, and the honest answer is that it depends.
Three things worth doing before 5 November
The next rate decision lands on 5 November. None of these needs a view on what it will be, and the first two cost nothing.
Write down the exposure before you look at a rate. How much foreign currency you must buy or sell over the next twelve months, and the rate at which the price you quoted a customer stops working. Both are facts about your business rather than opinions about the market, and most finance teams have never written the second one down.
Set a cover level and a review date, not a target rate. "Half of the next six months, reviewed monthly" is a decision somebody can be held to, which is the entire point. "We'll see where it goes" is a position with nobody's name on it. Check that whoever you deal with can execute what you write down, because not everyone offering business FX does forward contracts. The Bank of England publishes its daily spot rates free on its own site if you want a benchmark to review against.
Find out what the alternative actually costs. Lloyds publishes its FX margins by payment size and TSB publishes its by currency, both on their own sites, both checked on 13 October 2026, and neither page carries an effective date. Knowing those numbers is the difference between a quote and a quote you can price. Then ask your provider for the spot rate, the forward rate and the gap between them in basis points, on the same call. Forward points are the interest rate differential between two currencies, not a charge.
Our own position, since the piece is about asking. Pathfinder isn't directly FCA authorised. We work through authorised partners who hold the permissions and safeguard client money, and we don't run a proprietary book, so no day suits us better than another for you to deal. None of this is a recommendation to hedge or not to hedge.
The finance director in the Midlands will probably be fine. He will also never find out what the waiting cost him, because nobody is keeping that score. That is the only reason it feels free.
Get in touch
If you want a second pair of eyes on an exposure, or the spot and the forward side by side, pick up the phone.
Pathfinder FX
1 Knights Court, Archers Way, Battlefield Enterprise Park, Shrewsbury, SY1 3GA
+44 (0)1743 290955
Comments