Archives April 2025

The GCC’s open-door economic policy is at a crossroads as geo-fragmentation rises and the US-China rivalry heats up. 

A long-held policy of the six-member Gulf Cooperation Council (GCC) is to forge commercial ties with countries around the world, regardless of their political inclinations. Amid geoeconomic headwinds, that policy now hangs in the balance.

Western attempts to decouple from China and a drastic turnabout in US trade policy are “key strategic” concerns for leaders and executives in Bahrain, Kuwait, Oman, Qatar, and, especially, Saudi Arabia and the United Arab Emirates, says Steven Wright, a political economist at Hamad Bin Khalifa University in Doha.

These developments are “increasingly feeding into economic policy discussions,” pointing to an “inevitable shift” from the “straightforward balancing act” the GCC has maintained, where security comes from the US and trade depends on China, to a “more complex calculation,” Wright says.

The Persian Gulf states are still looking to preserve and expand bilateral business ties, at least for long enough to build domestic capacity. But the clock is ticking.

Gulf state officials see the US-China rivalry as “a significant issue” as they strive to diversify away from oil and gas, and are responding with “a delicate game of balance,” says M.R. Raghu, chief executive of Marmore MENA Intelligence, a subsidiary of Kuwait-based asset manager and investment bank Markaz,

While President Trump’s tariff and trade policies might push the Gulf states further into China’s pocket or prompt them to search for other partners, their reliance on the US for security makes it unlikely that any “significant shifts” will occur in the short term, he argues. “GCC states are likely preparing for multiple scenarios, emphasizing diversification and flexibility.”

In the same vein, it is naïve of the US to expect the Gulf to fully distance itself from China and other Asian nations as cooperation runs wide and deep, especially in the massive regional construction market, says Junaid Ansari, director of investment strategy and research at Kuwait-based Kamco Invest.

“This is expected to continue in the near to mid-term as these countries are heavily involved with the strategic visions of GCC governments,” Ansari notes.

In fact, some experts believe that China’s long-term political stability, strategic planning and focus on development, might ultimately make it the preferred partner.

A closer look at three industries—AI, renewable energy, and critical minerals—highlights the region’s position while central turf in a rising great-power competition as the US and China vie to entrench their products in the region to keep each other out, providing insight about how difficult the GCC’s balancing act really is.

All About AI

The GCC—and particularly its heavyweights, Saudi Arabia and the UAE—are betting big on AI. But this is a space where the policy of pursuing the best offer, regardless of who is offering, is complicated by the growing US-China animosity.

In its latest annual report, the US-China Economic and Security Review Commission—a bipartisan advisory panel of the US Congress—singled out AI tie-ups between Chinese and Gulf firms as a “new vector of vulnerability.” Already in 2023, then-President Joe Biden tightened restrictions on exports of dual-use semiconductors to a host of countries, many across the Middle East, that could provide a backdoor for Chinese access.

But advanced American chips are precisely what Saudi Arabia and the UAE need to turn themselves into global data-center hubs, and they appear willing to create at least some distance from China to get access.

Backroom negotiations led to a $1.5 billion investment by Microsoft last year in Emirati AI development firm G42, which is backed by Mubadala, an Abu Dhabi sovereign wealth fund. The deal, which required G42 to divest its holdings of Chinese tech companies, exemplifies both the concessions the Gulf has been open to making and the complexities that remain. G42 sold the “blacklisted” stakes, but to Lunate, an alternative asset manager in Abu Dhabi supported by ADQ, another emirate sovereign fund.

Other data-center partnerships have followed in the US and the Gulf involving American, UAE, and Saudi entities from Google to Dubai-based developer Damac to MGX, a technology investment firm launched last year with G42 and Mubadala as foundational partners.

This flurry of activity suggests the Gulf is striving to stay in Washington’s good graces and preserve its access to next-gen chips while it advances its homegrown tech ecosystem. But Saudi Arabia and the UAE are also continuing to cooperate with Chinese tech companies, which dominate the development of 5G telecommunication networks across the GCC.

Junaid Ansari of Kamco Invest says he has yet to see indications that GCC governments or firms are taking sides.

“Since the present situation is very volatile, it is best to keep an open policy,” he cautions.

Diversifying During Change

Could the moment come when the Trump administration issues a “You are either with us or against us”-style ultimatum?

This is no laughing matter for the Gulf, which is seeking to transition away from its hydrocarbons-reliant economy amid growing global turbulence.

The GCC has thrived in the post-pandemic years thanks to diligent governance, development programs like Saudi Arabia’s Vision 2030, and the wars in Ukraine and the larger Middle East. Meanwhile, the Gulf region has become a safe haven for businesses of all sorts. International Monetary Fund Managing Director Kristalina Georgieva recently called it “a bright spot in the world economy.”

There are challenges, however, and the fraying of global trade makes tackling them that much harder.

A glut of supply amid soft demand has kept crude prices below many Gulf states’ breakeven levels, putting pressure on public finances. The massive spending required by Vision 2030 is straining Saudi coffers as private investment has been slow to come aboard. Bahrain’s soaring debt led to Fitch Ratings downgrading its outlook to negative in February. And Kuwait is gripped by political uncertainty, nearly a year into an indefinite suspension of parliament.

Against this backdrop, Trump’s likely inflationary approach to economic policymaking risks keeping interest rates high in the US and the Gulf, where currencies are pegged to or weighted toward the US dollar. A slowdown in global consumer demand would impact the GCC, which depends on an unrestrained flow of goods and services. And the US president’s promise to “drill, baby, drill!” could cause oil prices to slide further, especially as OPEC+ is taking steps to hike output.

“It is very difficult to assess where things will converge,” says Ansari, noting that widespread volatility and the “brute nature” of some of Trump’s policies make shifts in international relations likely.

For the GCC, the way forward remains centered on economic reform and diversification, like raising some corporate, individual or sales taxes to improve the health of public finances and streamlining regulations, Georgieva said in Dubai in February.

Localization, Localization, Localization

Renewable energy is an area where, for lack of alternatives, the Gulf states continue to work closely with China, even as they push to develop their domestic industries.

In 2022, the UAE and Saudi Arabia imported 11.4 GW of photovoltaic components from China, a 78% year-on-year jump. Today, electric Chinese cars dot Dubai’s highways as they offer a better bang for the buck than the likes of Tesla.

The Middle East, led by Saudi Arabia, Iraq, and the UAE, received more investments funds through China’s Belt and Road Initiative than any other region last year, a total of $39 billion. Nearly $12 billion went to projects in the solar, wind, and waste-to-energy spaces.

Here too, however, change is afoot.

“What I think is quite noteworthy is how GCC states are increasingly looking to develop their own domestic manufacturing capabilities,” says Wright at Hamad Bin Khalifa University.

Oman’s Mays Motors recently delivered its first electric vehicles (EVs). Saudi Arabia’s Ceer says it will follow in early 2026. And one of Saudi Arabia’s biggest bets in EV manufacturing is a partnership with California-based Lucid Motors.

The Gulf retains an outsized reliance on China for imports of renewable-related raw materials and finished products, Ansari notes. But this will change, he predicts, as regional companies grow capacity and Saudi Arabia develops alternative procurement channels for critical minerals and rare earths.

Copper, lithium, nickel, scandium, and gallium—crucial inputs for wind turbines, EV batteries, and other such systems—will become exponentially more sought-after. China controls large shares of deposits and upward of 90% of processing capacity for some of these elements. But Saudi Arabia sees mining as another vital pillar of economic growth.

Its state-owned mining company, Ma’aden, is pursuing more domestic output, including through partnerships with start-ups from Australia, the US, and elsewhere, to identify untapped riches under the Arabian Shield rock formation and to recycle elements from industrial waste.

Manara Minerals, a joint-venture between Ma’aden and the Public Investment Fund—the preeminent Saudi sovereign investor—is on a global shopping spree for mines, or shares thereof, from Zambia to Chile. A year ago, Manara bought 10% of Vale Base Metals, a subsidiary of the Brazilian metals and mining giant, for $2.5 billion.

That’s an example of the GCC looking for partners beyond the US and China as it seeks to protect its independence and, especially for Saudi Arabia, to raise its global profile, says Raghu of Marmore MENA Intelligence.

The Gulf is proving sophisticated and pragmatic in how it advertises deals, says Wright, including emphasizing those with US companies in an effort to appease Trump. But the superpowers’ own very different approaches to relationship-building beg the question of which one the Gulf states prefer in the long term.

“The key question,” he argues, “is what has more sustainability: a large-scale transactional announcement that is unlikely to be fully realized, or a series of billion-dollar agreements in a variety of sectors? My view is that the trends with China look far more promising over the long term.”

Shares of Aldeyra Therapeutics (ALDX) plummeted nearly 75% to an all-time low Thursday morning after the Food and Drug Administration (FDA) said the company’s dry eye disease drug has not proven to be effective in enough studies.

The developmental drug company said that it received a letter from the FDA responding to its new drug application (NDA) for reproxalap, a treatment for dry eye disease.

The drug has “failed to demonstrate efficacy in adequate and well controlled studies in treating ocular symptoms associated with dry eyes,” the FDA wrote, Aldeyra said. The agency told the firm that it needs to prove the drug’s effectiveness in at least one more clinical trial.

The drugmaker said it expects to announce results from an ongoing trial in the second quarter, with plans to resubmit its NDA by mid-2025 if the trial has positive results. “The review period for the potential NDA resubmission is expected to be six months,” Aldeyra said.

Shares of Aldeyra were down 74% in recent trading to $1.39 after earlier touching a record-low $1.18. The stock had been up nearly 30% over the past 12 months entering Thursday.

Convera is excited to announce The Payments Pulse, a new multi-part report analyzing the changing state of commerce in its quest for standardization and efficiency. As always, cross-border payments play a critical role, and the future will unfold with these systems positioned front and center.

As the global economy digitizes and transforms at a breakneck pace, Convera takes the pulse of the global payments industry, breaking down the latest macro trends and tactics that will move the world forward through innovations, disruptions and an evolving regulatory environment.

Download part 1 of The Payments Pulse now

Cross-border payments market projected to exceed $290 trillion by 2030

The cross-border payments ecosystem is undergoing rapid transformation, with the global market expected to surpass $290 trillion by 2030. This growth is driven by a combination of globalization, digital commerce, fintech innovation and evolving regulatory frameworks. As businesses and financial institutions continue to adapt to this dynamic environment, understanding the key trends and challenges shaping the future of international payments is crucial for staying competitive and compliant.

Trends driving growth in cross-border payments

The cross-border payments landscape has become increasingly essential to global finance, encompassing a wide range of transactions, from family remittances to large-scale business payments. In this expanding market, cross-border payments are poised to play an even larger role in global trade, financial inclusion and the expansion of e-commerce.

Several macro trends are driving this growth, including:

Globalization and trade

International trade heavily influences cross-border payments. As global trade continues to grow, the need for efficient, secure and scalable payment solutions becomes more critical. Projections suggest that by 2030, business-to-business (B2B) transactions will constitute the largest share of the cross-border payments market, expanding from $39 trillion in 2023 to $56 trillion.

Additionally, the ISO 20022 standard is set to modernize the cross-border payment experience, enhancing transparency and reducing transaction costs.

Open banking and B2B e-commerce

The expansion of open banking is enabling businesses to access better financial services, with regulations that support seamless integration across payment platforms.

The rise of B2B e-commerce, along with the automation of accounts payable and receivable (AP/AR) processes, is further boosting the demand for advanced cross-border payment solutions.

Understanding the market breakdown

Cross-border payments can be broadly divided into wholesale and retail segments. Wholesale payments primarily involve large transactions between financial institutions, such as SWIFT transfers, international wire payments and foreign exchange (FX) transactions. Retail payments, on the other hand, include smaller transactions like remittances, online purchases, and e-wallet or card-based payments.

In 2023, the global cross-border payments market was valued at approximately $190.1 trillion. By 2030, it is projected to rise to $290.2 trillion, with wholesale payments accounting for most of this growth.

Notably, B2B payments are expected to experience a sharp increase. Consumer cross-border payments, although smaller, are also poised to double due to the expanding role of digital wallets and e-commerce.

The role of ISO 20022 in cross-border payments

A key development in the evolution of cross-border payments is the migration to the ISO 20022 messaging standard, which is set to become the global language for financial communications. This transition will enable financial institutions to process payments more efficiently, with improved operational capabilities and compliance mechanisms.

ISO 20022 supports a data-rich format that allows for real-time processing and automation, drastically reducing the need for manual interventions. This will lead to faster payment processing, fewer errors and better overall transparency in transactions.

The transition to ISO 20022 is already underway, with major deadlines looming for systems like SWIFT and the Federal Reserve’s FedNow and Fedwire networks. By November 2025, the SWIFT network will complete its shift to ISO 20022, phasing out legacy MT messages. With over 32% of financial institutions already adopting this standard, the industry is moving quickly to adopt this new messaging protocol.

Overcoming challenges in cross-border payments

Despite the vast potential of cross-border payments, several obstacles hinder their efficiency. These include currency fluctuations, high transaction costs, slow processing times, and regulatory barriers such as tariffs, sanctions, anti-money laundering laws and know-your-customer compliance.

Businesses and financial institutions also face increasing pressure to comply with diverse regulatory frameworks, including an array of data privacy laws. The complexities of cross-border payments can be especially burdensome due to the costs and time associated with navigating these varying regulations.

Cooperation is the key to overcoming these cross-border challenges. Collaborations between traditional financial institutions, fintech companies and payment solution platforms such as Convera are helping to future-proof payment solutions and improve customer experience.

The evolving regulatory landscape

The global regulatory landscape is undergoing significant changes as governments address the challenges posed by technological advancements, geopolitical tensions and shifting economic priorities.

In the US, for example, the Trump administration has been particularly focused on reducing regulatory hurdles for fintechs. This could have significant implications for cross-border payments.

One of the most notable regulatory shifts is the push to expand the role of stablecoins in the payments ecosystem. The bipartisan Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, introduced in early 2025, aims to create clear regulations for stablecoins, making them a viable tool for cross-border payments. This act seeks to ensure consumer protection, transparency and stability within the stablecoin market by setting reserve requirements and imposing dual regulatory oversight.

The European Union has taken a more cautious approach, introducing the Markets in Crypto-Assets (MiCA) regulation to oversee digital assets, including stablecoins and tokenized real-world assets. Complying with these standards can be challenging for businesses operating in both the US and the EU.

Additionally, the EU’s Payment Services Directive 3 (PSD3) will expand open banking regulations starting in July 2025, enabling cross-border payment initiation and multi-currency settlements. This move contrasts with the US approach, where open banking laws are still in development.

Looking to the future of cross-border payments

The future of cross-border payments hinges on further innovations and improvements in infrastructure. With the advent of real-time payments, ISO 20022 and increasing digitalization, the payments landscape is moving toward faster, more efficient and transparent solutions.

Download Module 1 of The Payments Pulse now and stay tuned for Module 2 of the report coming in May to discover more tips on navigating the complexities of global commerce and trade.

To succeed in this evolving environment, businesses need to partner with trusted providers who can guide them through the complexities. Convera’s global network and ISO 20022–compliant platform offers businesses the tools to streamline payments, mitigate risks and comply with regulatory requirements.

Want more insights into the topics shaping the future of cross-border payments? Tune in to Converge, with new episodes every Wednesday.

Plus, register for the Daily Market Update to get the latest currency news and FX analysis from our experts.

Two of India’s biggest telecom providers, Reliance Jio and Bharti Airtel, separately inked deals with Elon Musk’s Starlink last month to provide satellite-based internet services there. The pacts open up vast opportunities for Starlink and its parent company, SpaceX, in the multi-billion-dollar Indian satellite communication services market. As of early 2025, approximately 654 million people have yet to gain internet access, according to DataReportal.

Starlink offers high-speed internet and data services via a constellation of 5,600 low-Earth-orbit satellites. Internationally, Starlink provides 2.7 million customers with internet services at speeds ranging from 50 to 200 Mbps.

Tying up with Starlink gives a significant leg up in the Indian telecom market to billionaires Sunil Bharti Mittal, owner of Bharti Airtel, and Mukesh Ambani, proprietor of Reliance Jio. The country’s third biggest telecom player, Vodafone Idea, will have to rework its strategy, although there is talk of it signing with Starlink as well. State-run BSNL is reported to have rejected a deal.

SpaceX and Starlink have been looking to enter the Indian market since 2019. Musk’s role in the Trump administration and his private meeting with Prime Minister Narendra Modi in Washington last month reportedly helped pave the way.

Looking ahead, Reliance Jio and Bharti Airtel view Starlink as a collaborator to complement their traditional fiber-based data and telecom services in remote and uncovered areas of India. As per their announcements, both companies will sell Starlink equipment and services through their vast networks of stores. Approvals from the Telecom Regulatory Authority of India and the Indian Space Promotion and Authorization Centre for the Reliance Jio and Bharti Airtel deals are yet to come. Data security and geopolitical concerns have been flagged by opposition political parties, citing Starlink’s threat to cut services to Ukraine in the midst of its war with Russia. But policy analysts expect a smooth ride with regulators, given the stature of the two top telecom services providers.

Updated on April 1st, 2025 by Nathan Parsh

Whitestone REIT (WSR) has two appealing investment characteristics:

#1: It is a REIT so it has a favorable tax structure and pays out the majority of its earnings as dividends.
Related:  List of publicly traded REITs

#2: It pays dividends monthly instead of quarterly.
Related: List of monthly dividend stocks

You can download our full Excel spreadsheet of all monthly dividend stocks (along with metrics that matter like dividend yield and payout ratio) by clicking on the link below:

Whitestone REIT’s trifecta of favorable tax status as a REIT, a high yield, and a monthly dividend make it appealing to individual investors.

But there’s more to the company than just these factors. Keep reading this article to learn more about Whitestone REIT.

Business Overview

Whitestone is a retail REIT that owns 55 properties with about 4.9 million square feet of gross leasable area, primarily in fast-growing U.S. markets such as Texas and Arizona. Its tenant base is very diversified,d consisting of more than 1,400 tenants with no single tenant exceeding 2.1% of annualized base rental revenue.

Source: Investor Presentation

Its strategy is to prioritize renting to strong tenants and service-oriented businesses, including grocery, restaurant, health and fitness, financial services, logistics services, education, and entertainment, etc., in neighborhoods with high disposable income. Whitestone was founded in 1998 and is headquartered in Houston, Texas.

Whitestone reported its fourth-quarter of 2024 results on March 3rd, 2025, during which it witnessed an occupancy rate of 94.1% versus 94.2% in Q4 2023. Revenue improved 8.8% for the quarter to $40.8 million from the same quarter of 2023. Funds from operations (“FFO”) rose 33% year-over-year to $14.7 million, while FFO per share rose by the same percentage to $0.28. Same-store net operating income (“SSNOI”) grew 5.8% to $25 million.

Also, rental rate growth was 21.9%, up slightly from 21.8% a year ago, supported by a jump in renewal leases rate growth of 19% versus 15.3% a year ago. Rental rate growth in new leases of 36.1% was down from 37.3% a year ago. There were 29 new leases and 50 renewal leases in the quarter.

For 2024, revenue grew 5.0% to $154.3 million, FFO grew 12% to $50.7 million, and FFO per share increased 11.4% to $0.98.

Whitestone expects FFO to be in the range of $1.03 to $1.07 per share in 2025.

Growth Prospects

Whitestone’s growth strategy is centered around:

1. Investing in locations with solid population growth
2. Acquiring properties that are mismanaged, overleveraged, or in foreclosure or receivership
3. Enhancing value property

Since Whitestone began reporting FFO, it has seen minimal growth in its FFOPS. In fact, FFOPS has actually declined. This is not a result of decreased FFO but an outstanding increase in shares. Since 2014, Whitestone has issued more than 25 million shares, effectively doubling its share count, primarily to fund acquisitions.

Due to that share dilution, dividend growth was minimal from 2016 to 2019, and a dividend cut occurred during the pandemic. In February 2021 and 2022, the REIT declared dividend increases. While it did not declare a dividend increase in 2023, it resumed increasing the dividend in March 2024. Whitestone recently raised its dividend 9% to $0.045 in early 2025.

The REIT should be able to improve its dividend in the long run. For now, we use an estimated dividend growth rate of 6% through 2030, which would lead to a sustainable payout ratio of ~51%, which is a very reasonable figure for a REIT. Whitestone’s exposure to the high-growth Sun Belt market and investments in acquisitions, redevelopment, and development projects will drive future growth.

The continuation of SSNOI growth is a good sign, and we would like to see it stay that way. For now, we estimate an FFOPS growth rate of 6% through 2030.

Dividend & Valuation Analysis

Whitestone cut its dividend by 63% in 2020. The company is now steadily increasing its dividend, but it’s a long way off from the pre-pandemic levels.

At the end of Q4 2024, Whitestone had a debt-to-asset ratio of 61% and a debt-to-equity ratio of 1.6 times. The REIT had $5.2 million in cash and cash equivalents. Moreover, its payout ratio is much more sustainable than pre-pandemic levels because of a lower dividend.

The distribution looks secure going forward. Based on our projected FFO-per-share of $1.05 for the full year, we expect Whitestone to maintain a dividend payout ratio of 51% for 2025. A dividend payout ratio of close to 50% is highly unusual for REITs and likely implies a high level of dividend safety.

With such a low payout ratio, we believe the distribution will certainly increase from its current low base over the next several years. Whitestone currently has a 3.7% yield. Additional distribution growth would only enhance investors’ yield on cost.

Final Thoughts

With a 3.7% distribution yield, positive EPS growth expectations, and monthly dividends, Whitestone offers investors an expected total annual return of ~7% over the next five years.

This is without any increase in the distribution over the next five years. We believe distribution increases are likely in the medium term because Whitestone’s payout ratio is abnormally low for a REIT.

The monthly dividends are a bonus for investors looking for income.

Don’t miss the resources below for more monthly dividend stock investing research.

And see the resources below for more compelling investment ideas for dividend growth stocks and/or high-yield investment securities.

Written by the Market Insights Team

The sharp global market selloff underscores investor skepticism about any beneficiaries emerging from the latest and largest escalation in the trade war. It also signals growing concerns that the US could be among the hardest-hit by Trump’s protectionist measures. US equities are set to open the day over 3% lower and the US dollar is already 1% lower against a basket of currencies – heading for one of its worst days of the year.

Trump opts for shock therapy

George Vessey – Lead FX & Macro Strategist

The Trump administration has unleashed aggressive tariff measures in both scale and breadth that go far beyond his first-term levies. They hit everyone – friend and foe. As well as the 10% tariff across the board, he’s overlayed that with additional tariffs on a wide group of countries that the US views as already implicitly placing tariffs on US exports. The market reaction has been ugly. Nasdaq 100 futures are down by about 4%, and S&P 500 futures by nearly 3%. In a classic flight to safety, Gold rose to new all-time highs and yields fell on Treasuries of all maturities, weakening the US dollar to 6-month lows.

Trump has implemented 10% blanket tariffs on all imports, starting April 5, extending them further for China (54%), the EU (20%), Japan (24) and UK (10%), with charges largely based on trade surpluses with the US. He also signaled upcoming duties on pharmaceutical drugs, semiconductor chips, lumber, and copper. Combined with prior import taxes on autos and goods from Canada, Mexico, and China, these measures will raise the average US tariff rate to 23%—a dramatic increase from 2.3% in 2024. This is the highest average US tariff rate in more than a century, and surpasses the infamous 1930 Smoot-Hawley tariffs, which arguably worsened the Great Depression.

This is a major shock to the world economy and close to the worst-case scenario Trump had threatened on his campaign trail. It will prompt retaliatory measures from trading partners and although there may be room for negotiation, high tariffs and lingering uncertainty raise recession risks. Tariffs will boost inflation in the short-term, weighing on real disposable income and cutting into spending; financial market conditions will likely tighten and the risk of equity price declines could hit consumer spending via the wealth effect; and trade policy uncertainty will remain elevated, which is suffocating for business investment.

As for the US dollar, well – so far its safe haven status has not cushioned the blow. Investors are focussed more on US stagflation and recession fears. USD/JPY is down 1.4% today, and EUR/USD up almost 1% – dragging the US dollar index to its lowest level since before the election last year.

Euro enthused by Europe’s vow to retaliate

George Vessey – Lead FX & Macro Strategist

As well as falling Treasury yields weighing on the US dollar, EUR/USD is being supported by the proactive approach of EU leaders to US tariffs. The EU is preparing a package of crisis measures to guard its economy from Trump tariffs. EUR/USD has jumped beyond $1.09 this morning, matching its highest level in the post-election period.

European currencies, including the euro, are still viewed as vulnerable, because Trump has been so vocal about growing hostility towards the EU. This may result in smaller trade negotiation room for the bloc, which clouds the growth outlook. However, pre-tariff-announcement euro strength materialized following reports of EU Commission plans for economic support measures. Moreover, in the medium term, we also think that Germany’s fiscal policy stimulus should provide a positive offset and help Europe to weather the tariffs storm, while the ECB is likely to take time to construct its policy response and is unlikely to cut rates this month as it works out the implications of the levies on not only growth but also inflation.

This could be why FX options traders are still more optimistic on the euro’s outlook further down the line. So-called risk reversals, a closely watched barometer of positioning, show investors are the most bullish on the euro over the next month since late 2020. The repricing in sentiment is also evident over the longer term. While one-year risk reversals still suggest the euro will be weaker in 12 months, that gauge jumped in March by the second most on record, and has extended higher today – a sign of the speed at which traders are turning more positive on the currency.

A Brexit dividend at last

George Vessey – Lead FX & Macro Strategist

As we’ve been highlighting for several weeks, the pound continues to act as a safe haven tariff play.  Along with broader markets, sterling was volatile during Trump’s announcement. It did briefly turn lower when it was confirmed UK imports would receive a 10% tariff. But the reality is that 10% is far more lenient than what other nations are facing, and this has helped send GBP/USD soaring to $1.31 this morning – it’s highest level since October last year.

We also mentioned yesterday that GBP/USD has consolidated around the $1.29 handle for the past four weeks, with no reversal signal identified on the charts and as long as the pair held above the 200-day moving average – the path of least resistance should remain to the topside. The technical and fundamental analysis was correct. It is not just sterling strength though, it is US dollar weakness – hence the mixed performance of other GBP crosses whilst the USD is lower across the board. This is understandable because ultimately, US consumers and businesses shoulder the higher import costs – and US recession risks have shot up, dragging US yields lower.

Since Britain had a broadly balanced trade relationship with the US, it did not deserve to be punished with reciprocal tariffs. UK PM Starmer will now continue to negotiate a UK-US trade deal which he hopes will ultimately cut the US tariff on British exports. But there is already relief given the 10% tariff is the lowest rate imposed by the US president – half the EU’s 20% rate – a bonus for leaving the EU. This is why sterling could continue to trade more like a relative haven in this global trade war.

GBP/USD jumps to 6-month high

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: March 31- April 4

All times are in BST

Have a question? [email protected]

*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.