A strong US dollar can mean a lot of different things for the world’s economies. What impact could it have on UK businesses? If you are a business owner in the UK, should you be concerned about the rise in value of the US dollar? Or should you dismiss it as something that occurs often in currency values? Whether the impact is good or bad, the US dollar is on the rise and UK business owners could begin feeling the effects soon.
From tourism to goods and services, every UK business can expect to see some sort of impact. In fact, the tourism trade will receive the most noticeable effect of a rising US dollar as more vacationers from the US will visit the UK. This could also mean that businesses in and around tourist destinations will see more business as vacationers tend to spend more money of impulse items when travelling. What does this mean for the hospitality industry? Hotel and restaurant owners will also see an increase in sales as the tourism industry picks up.
What about the businesses selling their products abroad? Will they see any impact from a rising US dollar? With consumer spending in the US on the rise, if your UK business sells products in the US, you will be sure to see an increase in sales and profits even though the £ may be dropping slightly. So far, a US dollar that is rising in value doesn’t look so bad. There is another side to this though.
As the US dollar strengthens, exports from the US will increase in price for foreign firms, and trading could be affected for companies dealing in more than one currency. This could mean that UK businesses would have to be more careful with their currency conversion timing and ensure that they closely follow the trends in the currency markets to get the most value out of their own currency.
UK companies with operations in the US also need to be sure that their assets and liabilities are valued in the same currency as much as possible. This is to ensure that any strengthening or weakening in either of the currencies do not affect their ability to finance their operations or business growth.
There are many things that UK businesses can do to protect themselves from a rising US dollar. By following the currency markets closely and remaining focused, many UK business owners will remain successful until the pound regains its growth.