Exchange Rate Risk: A US financial institution borrowed $100 million for 1 year through deposits in the US. At the same time, it borrowed a sum equivalent to $100 million in GBP for 1 year from a lender in UK when the exchange rate was 1.4 USD per GBP. The interest rate that the financial institution has to pay on US deposits is 2% while the same to UK lender is 1%. The financial institution used $150 million to give out a 1-year loan to a US firm at an interest rate of 5%. The remaining $50 million, in GBP equivalent, went as a 1-year loan to a UK firm at an interest rate of 4% (the exchange rate is still 1.4 USD per GBP).

What is the exchange rate risk that the US institution is facing?