Halden & Rowe · Finance · FX
Euro strength has widened the unhedged margin gap in Ireland.
GBP/EUR has moved 3.4% against plan; the H2 buying book is 60% unhedged.
Reading
What Ana sees this morning.
What happened
The rate assumed in the H2 plan was 1.17. Spot has held at 1.13 for six weeks. Applied to the unhedged 60% of Irish inbound, this is a 210 bps landed-cost drag.
Why it matters
The hedge programme covers 40% of H2 by policy. The move is now durable enough that the treasury policy triggers a review — the trigger fired on 24 June.
Evidence
What Ana is reading.
The signals behind the prompt. Every line is drawn from the trading data available to Ana this morning.
Plan rate
GBP/EUR 1.17
Six-week spot
1.13
Hedge cover
40% of H2
Policy trigger
fired 24 Jun
Estimated impact · half-year
£160Klanded-cost drag, H2
How Ana sized it · Unhedged inbound value × the rate gap, applied to the H2 open-to-buy book at current mix.
Recommended action
What Ana would do.
One clear next step, and the alternatives Ana considered before landing on it.
Bring forward the H2 hedge review; extend cover to 70% at spot on the Irish inbound tranche.
Why · The move has cleared the policy trigger. A partial extension preserves optionality if the rate reverts.
Alternatives Ana considered
- 1.Hold policy at 40% and revisit at the September treasury meeting.
- 2.Extend fully to 100% on the Irish tranche only; higher cost of carry if the rate reverts.
Decision
Close the loop.
Accepting records the intent and starts measurement against the estimated impact. Dismissing files the reasoning so the same prompt does not re-surface without new evidence.
Close the loop
Accept to record the intent and begin measurement. Dismiss to file the reasoning. Assign to route the decision to someone else on the team.
Context
Metrics in play.
- Gross margin