Hannah McBeth

In GPS’ last article, we examined the role of correlation analysis in understanding currency movements, from Bitcoin’s evolving relationships to traditional currency pairings like EUR/USD and GBP/USD, among others. This discussion provided insights into how traders align strategies with interconnected markets.

Through our work with businesses of all sizes, we’ve seen firsthand how unpredictable market shifts can impact cash flow and profitability. The following analysis of our 2024-25 Economic Outlook Survey provides a closer look at challenges companies are facing, offering key takeaways that can help businesses refine their FX approach.

As we heard in our podcast episode, local currency accounts can offer businesses greater control, improved efficiency, and stronger global relationships—but there are also operational and regulatory considerations. Whatever your global business, an import/export business, a multinational managing regional payroll, or a SaaS company looking to simplify client payments, choosing the right partner is essential.

Correlation, a statistical measure of how two variables move in relation to each other, plays a key role in shaping trading strategies and identifying market opportunities in FX. Correlation coefficients, which range from -1.0 to +1.0, help quantify the strength and direction of relationships between currency pairs. A value of +1.0 indicates perfect positive correlation, meaning the two variables move in the same direction 100% of the time. A coefficient of -1.0 reflects perfect negative correlation, where the variables move in opposite directions.

In this post by Andrew Shortreid, SVP Global Institutional Sales at Corpay Cross-Border Solutions, he details important steps portfolio managers, members of investment committees, and fund managers can take to create effective hedging policy and optimize FX risk mitigation over time. In this piece, you’ll hear from a seasoned expert, who has worked in challenging roles in the fund and institutional space across European markets.

Your team is spending hours each week managing cross-border payments, manually processing transactions, and reconciling payments between various subsidiaries. With every new currency fluctuation, you face added risks that threaten to erode profits. Despite the size and success of your business, your current payment system is inefficient, and you know it’s time to make a change.

When we talk about managing currency risk, two approaches often come up: natural hedging and financial hedging. At their foundation, they are two different strategies for tackling the same problem: protecting your business from fluctuating exchange rates. Here we’ll break them down, using some real-world scenarios to help illustrate how companies deal with this challenge.

Treasury Departments face decision points when calculating budgets amid inflows and outflows of currencies. When a client operates in numerous markets with revenues and expenses, finance professionals rely on spot rates to calculate FX budget rates. Just like a farmer needs to forecast supplies and expenses for a successful harvest, getting budget allocations right means a good yield.