Navigating currency volatility in Q2 2026
Want to protect your margins against FX risk in Q2 and plan with confidence?
Our latest whitepaper covers everything you need to get your currency strategy in check this quarter, including:
- Analysis of GBP, USD and EUR movements and what they mean for risk-exposed businesses
- Actionable, strategic insights into why your business shouldn’t be reliant on the news cycle to make FX decisions
News: what’s shaping currency markets in Q2?
Markets emerged from Q1 2026 navigating a complex set of cross-currents – diverging central bank paths, softening growth and the lingering effects of a tariff environment that has yet to fully resolve. Then, an energy
shock, which few businesses priced into Q2 planning, further complicated the economic environment.
Ongoing conflict in the Middle East has reversed inflation trajectories and reset rate expectations – changes that are feeding directly into sterling, dollar and euro performance at different speeds and with different implications for businesses on each side.
Our latest forecasting report covers what has shifted across GBP, USD and EUR, where the key risks and inflection points now sit, and what businesses with cross-currency exposure should be watching for the remainder of the quarter.
Q2, market by market: what can you expect?
Sterling caught between fragile fundamentals and external shock
Flat GDP, rising unemployment and limited fiscal room left the UK with little momentum heading into Q2, and energy prices have since reversed rate cut expectations. UK businesses that budgeted on lower borrowing costs may need to reassess – the cost of servicing debt and managing cash flow is likely to be higher than planned.
Dollar strength constrained by structural weakness
The dollar’s strength has been heavily volatile, closely linked to ongoing geopolitical tensions. A Fed leadership transition in May adds uncertainty to a rate path that favours at least one cut – those relying on current dollar strength to manage margins may find the support short-lived.
Euro's rate advantage complicated by energy vulnerability
The longer-term case for euro strength remains intact for many forecasters, but Europe’s exposure as a net energy importer has shifted the near-term outlook considerably. Businesses could find their input costs rising through supply chains before the exchange rate catches up.
