Brexit: How does the falling pound affect your cloud costs?

With the pound falling rapidly against the dollar, how does this affect UK firms consuming US-based cloud services? Take part in our poll to find out!

UK firms are set to see their cloud costs skyrocket as the pound continues to fall against the dollar.

With many of the most popular cloud providers - including Microsoft, Amazon and Salesforce - being US-based and charging in dollars, UK-based firms may be feeling the squeeze as the exchange rate worsens.

One pound is, at the time of writing, worth $1.22, whereas it was worth $1.54 just a year ago, according to X-rates.com.

And with many economic forecasters predicting further drops in the value of sterling as the possibility of a so-called 'hard Brexit', whereby Britain leaves the EU single market and trades with the bloc under WTO rules, grows ever more likely, the problem for UK-based firms looks set to worsen.

Jonathan Watson, chief analyst at currencies.co.uk, said: "The fall of sterling and the rise of the US dollar has made buying services from US-based cloud vendors much more expensive for UK-based firms. With the GBP/USD exchange rate at a 30-year low, having dropped over 20 per cent since the EU referendum, the result could be a significant rise in costs to UK-based firms that wish to use cloud services from US vendors."

Watson advised firms to take account of exchange rate fluctuations in their contract negotiations.

"Whether or not UK firms can exit or renegotiate contracts is likely to depend on the supplier and the service agreement. But steps to mitigate the damage should be discussed from both angles. The buyer can negate the damage of exchange rate fluctuations by utilising forward contracts. These allow the exchange rate to be fixed for a specified period up to 18 months and ensure the purchaser has a predictable monthly expenditure on the US dollar based costs.

"It is not uncommon to see contracts of this type that include exchange rate clauses and this is something that UK-based firms should be considering when purchasing cloud services from vendors in the US," added Watson.

To gauge the feelings among UK firms, Computing has set up the below poll - please take part, and see for yourself how the falling value of the pound is affecting the cost of cloud use in the UK.