Britain, Business, Economic, Financial Markets, Government, International trade, United States

The US dollar: down but not out

ECONOMIC

Intro: Reports of the declining status of the US currency have been greatly exaggerated

For economists, the impact of a falling US dollar and how that impacts Britain will be observed and monitored closely. Of interest will be why the dollar has fallen of late, what President Trump’s attitude is towards the US currency, and how that impact will be felt.

The dollar lost around 2pc during January against a basket of major currencies (as measured by the DXY index). At the time of writing, the DXY is close to a four-year low of 96.79 – a staggering 10.7pc lower than this time last year. This significant weakening of the dollar has been driven by US policy shifts, tariff uncertainties, and geopolitical tensions. It also, to a lesser extent, reflects global effort to “de-dollarise” led by China and other large emerging markets.

Just days ago, the Federal Reserve held its main policy rate at 3.5-3.75pc. But the US central bank previously cut rates by 25 basis points at three consecutive meetings – in September, October, and December 2025. Lower rates typically weaken the dollar by reducing its appeal to yield-seeking investors, prompting capital flight to higher-return assets elsewhere. Financial markets are anticipating one or two more US rate cuts in 2026, putting further downward pressure on the dollar.

Since Trump took office last January, Fed boss Jerome Powell has come under intense pressure to cut rates faster and further, with the President eager to stimulate investment.

Nominated by Trump during his first term and reappointed four years later by President Biden, Powell has resisted. He has warned of the dangers of US inflation – 3pc as recently as September and still up at 2.7pc, above the 2pc target. Trump’s announcement that he wants Kevin Warsh as the next Fed boss when Powell’s term ends in May has seen the dollar strengthen, given Warsh’s reputation as an inflation-fighting hawk. Warsh, however, is also son-in-law of Trump’s long-standing friend and billionaire donor Ron Lauder. It is doubtful whether he’d be the president’s pick without having pledged to nudge the Fed’s policy committee towards lower borrowing costs – so the pace of rate cuts could quicken, putting more pressure on the dollar.

In theory, Trump’s tariffs should have bolstered the US currency by reducing imports and improving the US trade balance. But the scale of the measures announced on “Liberation Day” in April 2025 instead contributed heavily to the dollar’s fall in value.

The president’s measures – initially hiking average effective tariffs from 2.5pc to 27pc within a month – sparked market turmoil, including an asset sell-off that pressured the US currency. Direct retaliation from major trading powers including China and the EU further eroded investor confidence and prompted US capital outflows. Trump’s tariffs, while they are less punitive than first announced, have combined with broader macroeconomic concerns – including the rise of America’s debt from 100pc to 125pc of GDP over the last decade – to drive considerable “sell America” outflows to other major currencies.

While the related dollar weakening has aggravated US inflation, a cheaper currency helps US exporters, not least “rust belt” manufacturers that are a priority among Trump’s “Make America Great Again” (MAGA) movement. That’s why many are inclined to think the president wants the dollar to keep on falling.

Trump has fuelled these concerns, pointing to the “great valuation” of the sharply depreciated US currency. There are suspicions the White House initially made its maximalist tariff demands not only as a bargaining ploy, but to strategically devalue the currency. The president’s dollar stance is nuanced – and often contradictory. He values “reserve currency status”, which sees the dollar demanded around the world both for payment transactions and a store of value. That supports the US currency, allowing America to run looser monetary policy without the inflationary impact of a dangerously weak dollar. Nonetheless, Trump has also shown willingness to tolerate and even encourage dollar depreciation for export gains (given his emphasis on appealing to blue-collar workers). Talk of the dollar’s demise, and its loss of reserve currency status, is, without doubt, overdone. The US currency still accounts for about 60pc of global foreign exchange reserves and almost 90pc of global transactions by value, underscoring its entrenched role.

Quite clearly, as the dollar has weakened, certain “safe haven” currencies have gained, with the Swiss franc up 13pc against the dollar during 2025. And despite its recent volatility, gold has soared from around $3,100 to over $4,900 an ounce since April 2025, such has been the impact of Trump’s “shock and awe” tariff announcement and the escalation of geopolitical tensions ever since.

When it comes to pound sterling, and the broader UK economy, a weaker dollar delivers a mixed offering. Benefits in lower import costs and inflation are offset by challenges for exporters, investors, and multinational firms. Since Trump’s second term, the pound has strengthened around 12pc against the dollar, from roughly $1.23 to $1.37. This makes dollar-denominated imports cheaper, reducing costs for US goods and dollar-priced commodities like oil.

And while the UK remains an inflation outlier, with a headline rate of 3.4pc in December, up from 3.2pc the previous month and higher than other G7 nations, domestic price pressure would have been even worse were it not for a falling US currency. Tourists and businesses travelling to, or dealing with, the US have also gained, with pounds stretching further abroad.

Yet the downsides are significant, particularly for UK-based companies with substantial US exposure. British-based exporters to the US have found their goods more expensive in dollar terms, undermining competitiveness and demand – especially amid US tariffs that add further barriers.

Overall, while a weaker dollar has flattered the value of sterling, and helped keep a lid on UK inflation, it has also exposed many of the UK’s structural weaknesses – a trend that looks set to continue.

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Art, Artificial Intelligence, Arts, Culture, Society, Technology

AI-generic-slop is theft from real artists

CREATIVE ART

Intro: Art generated by online tools is painfully bland and is leading us down the path to cultural stagnation

Pablo Picasso, one of the most influential artists of the 20th century, admitted that “Great artists steal.” The Spanish genius assimilated African mask imagery into modern art, and many other greats throughout history have done something similar. Essentially, this is how creativity works. But behind their masterpieces are struggle, friction, and unique vision. Enter another entirely different beast, the theft by proliferating AI engines. These are killing creativity, harming real artists, and fuelling an epidemic of unoriginality.

By serving prompts to generators such as Midjourney or DALL-E, people can generate images on screen, in just a few seconds. Anyone can conjure up a Vincent van Gogh-styled still life or Leonardo da Vinci-inspired selfie and at once exhibit it online. Social media platforms such as X are filled with fans of this technology who declare: “AI art is art.” But this doesn’t make it true.

In fact, AI “art” doesn’t even exist – it is an illusion. AI models work on pattern recognition, not artistic decision making. While an “AI artist” may serve prompts to this technology, they cannot be considered the author of its output. It has simply been remixed from ready-made imagery without thinking, feeling, intent, or ingenuity. Absent from AI “art” is creative process, which should take more than a few seconds. This is apparent in the low-quality, generic slop that’s produced. Lacking a distinctiveness of style and voice, it can only offer a dynamic of smooth homogeneity.

It bypasses craft, which is what great artists develop – with brushes and paint, pencils and paper – over months, years, and even decades. AI artists celebrate the power of technology to make creativity accessible, and this forms their central argument and tenet as to why it’s so great. True craft, however, takes dedication, consistent practice, and experimentation.

John Constable not only worked tirelessly inside his studio but made countless studies en plein air – as revealed in Tate Britain’s current exhibition, Turner & Constable. Celebrating two of Britain’s greatest painters, it shows what being an artist really takes. On display are watercolours, oils and sketches, as well as paint-covered palettes, paintboxes, and even a sketching chair.

Among Constable’s masterpieces is his 1836 work Hampstead Heath with a Rainbow, where prismatic hues glide through menacing clouds. His technique looks effortless but was suffused with genius-level skill. And behind it, unseen by the average enthusiast, are more than 100 cloud studies he created in an attempt to capture their transient energy.

Where AI generates pictures in an instant, Constable was committed to an ongoing process; the experience gained through observation and documentation was ultimately of immense benefit to him.

Similarly, JMW Turner made around 37,000 sketches of landscapes he’d seen with his own eyes. Determined to evoke the raw power of nature – from blazing sunsets to howling storms – he pushed realism towards abstraction with an excitement that’s visible in his energetic brushstrokes.

In contrast to Constable and Turner’s radical compositions, AI’s aesthetic is flat, twee, and often old fashioned. Defined by a saccharine palette of candy colours and hazy tones, automatically generated landscapes are hollow, sanitised, and no match for Britain’s great painters and artists. Working some 200 years ago, they painted emotive, not idealised, places of both personal and historic significance.

What is more, both Constable and Turner began their paintings by looking, and really observing the world. This fundamental act is absent from the process of AI’s so-called artists who are more like a client giving instructions to a graphic designer than an artist painting at their easel. AI engines are also doing real harm to contemporary artists and their hard work.  

Among those who have already experienced its damaging effects is Australian painter Kim Leutwyler. She says her distinct style has been copied by app-generated portraits. “My issue isn’t with AI itself, but with the unethical way it has been trained without artists’ consent,” she said. “The right to opt in or out of having your data scraped for AI training should be fundamental, not optional.” This view is widely held across all of the creative industries.

AI, then, is pilfering from artists, the very people it relies on. It harms us all with its blandness. Rather than moving art forward, like Turner and Constable did in their day, it contributes to what has been termed “cultural stagnation”.

Anyone infuriated by Hollywood’s endless remakes of viewer favourites has a similar impact. It threatens both originality and individual thinking. And because future AI will only draw from more of this generated material, it will continue to create typical rather than unique visions.

AI art isn’t art, it’s a mirage, and it won’t be looked at for longer than a doom-scrolling second. In our world of efficiency and productivity, creative pursuits are one of very few remaining places where human endeavour is vital. Behind the brushstrokes of Turner and Constable are years of looking, thinking, making and struggle, and that’s what creative art is.

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Gaza, Israel, Palestine, United Nations, United States

Donald Trump’s Board of Peace

BOARD OF PEACE

Intro: This newly created body was supposed to give Gaza a future, but the US president is using it to attack and undermine the UN, international law, and multilateralism

Just a cursory glance at the logo of the Board of Peace tells you all you need to know. It is the globe and laurels of the UN – only gold, because this is Donald Trump’s initiative, and shows little of the world beyond North America.

The charter of the board, formally launched at the World Economic Forum in Davos just days ago, suggests that this is less America First than Trump Always. It is not “the US president” but Mr Trump himself who is named as chair, for as long as he wishes. He can choose his successor, decide the agenda, and axe whomever he chooses – even if they have down-paid the $1bn demanded for permanent membership. It is the institutional expression of his belief that he is bound not by law but “my own morality, my own mind”.

The body was born and constituted through subterfuge: the UN security council authorised a board of peace chaired by Mr Trump to oversee administration and reconstruction in Gaza. There were misgivings about the colonialist model and the free rein given to the US president, as well as the vagueness of the resolution. A desire to ensure his buy-in to a ceasefire won its passage.

What the US has created is something entirely different. The board’s charter does not mention Gaza once. A man increasingly fixated on landgrabs now heads an “international peace-building body” to replace “failed” institutions. To what extent this is a serious attempt to encroach upon, if not supplant, the UN, versus a symbolic declaration of power and creation of another forum for polishing his ego, is unclear. The early signs indicate that Mr Trump has overplayed his hand again. His claim that Vladimir Putin had joined (Putin disagreed) made it easier for the UK and others to back away from an offer they were not supposed to refuse.

Benjamin Netanyahu, another leader indicted by the International Criminal Court, will sit alongside stakeholders from Belarus, Uzbekistan, and Hungary. Eight Muslim-majority states, including Saudi Arabia, Egypt, and Turkey have together agreed to join. Traditional US allies, however, are conspicuously absent. It remains unclear how others can make themselves heard on Gaza’s future if they rightly shun a deliberate attempt to undermine multilateral institutions. But they must. The already difficult, almost intractable task of winning peace in Gaza and justice for Palestinians has been further compromised. With an executive board – featuring Tony Blair and Mr Trump’s son-in-law Jared Kushner – and a Gaza executive board containing regional officials, Palestinians are relegated to a fourth-tier technocratic committee.

For 2 million Palestinians enduring a brutal winter amid the ruins and ongoing bombardment by the Israeli Defence Force, the presentation of plans for the next 100 days by Palestinian and US officials suggests that the administration has not totally lost interest. Mr Kushner’s ambitious proposals will displease those on the Israeli right who want to displace Palestinians entirely. Increases in aid, the reopening of the Rafah crossing, repairs to essential infrastructure, and the reconstruction of homes and hospitals are all desperately needed. But what will materialise and on what terms?

Mr Trump’s real-estate fixation and desire to be applauded as a peacemaker may be the best hope of keeping him engaged, and reducing Netanyahu’s sway. Nonetheless, the rights of Palestinians are most certainly being treated as an irrelevant detail. That cannot stand. Mr Trump has contempt for international law; others must continue to strive to defend it.

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