What are the issues facing exchange rates in 2026 – and what do they mean for your cross-border transactions?

If you own property overseas, receive rent in another currency, or are planning to move abroad, exchange rates may not be something you really consider. A detail, an afterthought, or just one of those uncontrollable costs – nothing much you can do about it. 

In fact, that’s all only partly true. Gaining or losing thousands of pounds is hardly a detail, it’s best to plan a currency strategy from the start, and while you cannot control the general exchange rate, you can control yours!  

Take 2025. If you owned a rental property in the USA – a Florida condo for example –the value of the dollar fell sharply over the year, meaning that the money coming back from Florida was worth some 10% less at the end of the year than the start. For some, it wiped thousands off their returns. 

Something similar but less dramatic happened in Europe, where the euro gained some 5% on the pound. 

What about 2026? If you hoped things might settle down, the US action in Venezuela and its impact on exchange rates will have been a rude awakening. 

So, what are key factors to watch out for? What could affect currencies and why should they matter to you even if you don’t see yourself as a “currency expert”. 

Interest rates are still doing a lot of the heavy lifting

Interest rates remain one of the biggest drivers of exchange rates. In simple terms, higher interest rates tend to support a currency, while cuts can weaken it. 

In the US, expectations are that interest rates will continue to come down. At least they will if President Trump has his way. And if they fall in the US then they’ll probably fall in the UK too, taking the pound down too against the euro. 

For landlords and property owners, if you’re receiving rent in euros, or planning a future purchase, rate changes can quietly alter the real value of your money before it even reaches your bank account. 

Political uncertainty in the UK could keep sterling unsettled

Currencies don’t just react to economics; they react to confidence. 

In the UK, markets are watching political stability closely. Questions around the future of the prime minister continue, with important elections in May. Currency markets do not favour instability, and as we saw in the 2022 mini-Budget debacle when the pound fell to its lowest ever against the US dollar, they don’t like sharp changes in policy either. 

For landlords, especially those who didn’t plan to become landlords in the first place, this kind of uncertainty can feel distant until it affects the timing or value of a property purchase, sale, or income transfer. Even short-term political headlines can cause sharp movements in the pound. 

Geopolitical tensions can trigger sudden currency swings

Global events still have the power to move currencies very quickly. The conflict in Ukraine, US action in Venezuela and broader tensions between major global powers all create uncertainty. When markets feel nervous, money tends to move fast and currencies move with it. 

For anyone moving large sums across borders, these sudden swings can be unsettling. A transfer planned months in advance can end up costing far more, or delivering less, simply because the world changed direction overnight. 

Long-term shifts in how the world uses currencies

Beyond the headlines, there are quieter changes happening in the background. 

Some countries are gradually reducing their reliance on the US dollar and spreading risk across other currencies. While this is a slow process, it can affect how major currencies behave over time and make old patterns less reliable. 

For everyday landlords, this means exchange rates may not always “bounce back” in the way they once did. Planning ahead and having flexibility becomes more important than trying to second-guess the market. 

Differences in economic growth between countries

Finally, economic growth matters. 

If one country’s economy is growing faster than another’s, money tends to flow towards it and its currency can strengthen as a result. As growth expectations shift between the UK, the US, Europe and beyond, exchange rates can drift or jump accordingly. 

For property owners, this can affect everything from how affordable a purchase looks on paper to how much rental income is really worth once converted. 

A simple landlord example

Consider a UK landlord who inherited an apartment in Florida and rents it out long-term. Each year, they transfer the rental income back to the UK. In early 2025, the exchange rate looked healthy, so they waited, expecting it to improve further. Instead, the dollar weakened over the year. By the time they transferred the money, they received several thousand pounds less than they would have done just months earlier. 

Nothing about the property changed. The tenant didn’t leave. The rent didn’t drop. The loss came purely from exchange rates – and from not having a plan in place for when to move the money. 

This kind of scenario isn’t unusual. It affects accidental landlords just as much as seasoned investors. 

What this means in practice for landlords and property owners

You don’t need to be a professional investor for exchange rates to have a real impact on your finances. 

If you’re buying overseas, a small movement in the rate can add or remove thousands from the final cost. If you’re receiving rent in another currency, the timing of transfers can affect how much you actually have to spend at home. And if you’re selling a property abroad, the exchange rate on the day you move the money can matter just as much as the sale price. 

What you can do next

You don’t need to predict where exchange rates will go in 2026, but you can reduce risk and uncertainty by planning ahead. That may include taking out a forward contract, fixing the exchange rate for a certain period of time.  

Many landlords choose to: 

• Decide in advance what exchange rate would be “good enough” for them, rather than chasing the perfect one 

• Spread transfers over time instead of moving everything in one go 

• Fix an exchange rate for a future property purchase or sale so there are no nasty surprises 

• Get guidance on when major events, such as interest rate decisions or political announcements, are likely to affect markets 

At Smart Currency Exchange, we work with landlords of all kinds – including people who never expected to own a rental property at all. The aim isn’t to speculate or overcomplicate things, but to give you more control over large international payments and help protect the value of your money. 

This article is provided for general information purposes only and does not constitute financial, investment or tax advice. Exchange rates can move unpredictably and past performance is not a reliable indicator of future results. Readers should seek independent professional advice before making any financial decisions. Smart Currency Exchange Ltd is authorised by the Financial Conduct Authority as an Authorised Payment Institution.