Executive summary
This week brings three catalysts for GBP crosses: the Fed’s September meeting (Tue–Wed), the August UK CPI release on Wednesday morning, and the BoE decision on Thursday. For UK importers paying in USD or EUR, the mix argues for disciplined Q4 hedging rather than rate-timing. Expect event-driven swings and wider intraday spreads around announcement times.
What to watch
FOMC (Wed, evening UK time)
Markets lean toward a modest rate cut with cautious guidance. That keeps the dollar sensitive to incoming data rather than setting a one-way trend. For GBP/USD and EUR/USD, think “spiky” rather than “trending”.
UK CPI (Wed, 07:00 UK time)
The August print lands hours before the MPC. Services inflation and pay dynamics remain the BoE’s focal point; a surprise in either direction can quickly reprice GBP vol.
Bank of England (Thu, midday UK time)
After August’s trim to 4.00% (a close vote), the base case is a September hold while the Committee digests CPI and wage data. Initial GBP reaction will hinge on the vote split and any nuance on balance-sheet plans.
Q4 FX implications for UK importers
- Event risk is elevated. GBP/USD and GBP/EUR are likely to chop around releases; chasing moves intra-day can be costly.
- USD remains the swing factor. If the Fed cuts but sounds cautious, the dollar can stay firm on strong data; a softer tone could relieve USD pressure.
- EUR risks look idiosyncratic. Energy and regional growth headlines can add noise to EUR/GBP independent of UK data.
Practical hedging takeaways (Q4 2025)
- Layer forwards for cost certainty. Secure a tranche of forecast USD/EUR payables now and add on favourable moves. Forward contracts are binding derivatives and may require collateral/margin if markets move against you.
- Anchor to cash-flow, not meeting dates. Place hedges around payable due dates; avoid “market-at-the-bell” execution when spreads can widen.
- Keep some flexibility. If upside participation matters, consider a limited options overlay (e.g., simple calls) — noting premia and complexity — while keeping the core exposure in forwards for cost-effectiveness.
- Run a rolling coverage check. Reconcile hedged cover vs. updated sales/POs every 2–4 weeks; top-up or pause accordingly to avoid over-hedging.
- Tidy the plumbing. Ensure beneficiaries, settlement rails and KYC are in place ahead of trades so execution doesn’t outpace operations.
Key dates (UK time)
- Wed 17 September 2025, 07:00 – UK CPI (August)
- Wed 17 September 2025, evening – FOMC statement + press conference
- Thu 18 September 2025, 12:00 – BoE decision + minutes
