GBP/AUD is moving upwards in early trading on Friday. Currently, one British pound buys 1.8832 Australian dollars, up 0.21% as of 6:50 AM UTC.
The markets are now discussing the re-escalating tensions in the Middle East, after the US launched an airstrike in Iraq earlier today.
Oil prices are surging as investors fear that Iran will respond in some way.
OANDA analyst Jeffrey Halley commented:
“We are only into the third day of the new year, and a big fat dollop of geopolitical uncertainty has landed on investors’ desks. I am struggling to see how an Iranian riposte will not occur. Oil installations and tankers were my first thoughts.”
The Middle East tensions are weighing more on the Aussie than on the British pound, though the latter is not the ideal safe-haven.
Australia is a trade-reliant economy, which depends very much on the mood of China. Both countries recently released disappointing manufacturing data.
Besides, the Australian dollar is under increased pressure amid the bushfire crisis. The country was hit by bushfires two months ago, but the worrying thing is that they can get worse in the coming days.
Australia Prime Minister Scott Morrison said earlier today that he would cancel an official trip to India later this month to focus on the bushfire crisis. The visit was scheduled from January 13 to 16. Morrison was invited by Indian Prime Minister Narendra Modi.
Morrison was also due to visit Japan after that, though he didn’t reveal his plans for that trip.
Elsewhere, GBP traders are closely watching the Brexit developments. The UK is about to leave the European Union on January 31. The next important step for both sides is to reach a trade agreement within the current transition period limit set for the end of December 2020. UK Prime Minister Boris Johnson cast that deadline in stone by adding a stipulation in the Withdrawal Agreement Bill.
