The British pound was little changed against the Australian dollar on Wednesday. A mix of fears surrounding No Deal Brexit, Australia’s wildfires and geopolitics all made for uncertain trading. Global markets including gold and US share prices have been volatile in response to Iran launching tens of ballistic missiles at a military base in Iraq housing US forces.
GBP/AUD was higher by 7 pips (0.04%) to 1.9095 as of 2pm GMT, leaving the currency pair close to its highest in 5-days.
Unusually, the Australian dollar was something of a haven in overnight currency markets as speculators looked to reduce exposure to the US dollar and countries exposed to tensions between the US and Iran. The Australian dollar was perhaps aided by a traditionally strong correlation to gold prices due to Australia’s large gold exports. Gold reached $1600 per oz today for the first time since 2003 on news of the Iranian missile strike but reversed most of its gains after tweets from the US President and Iranian foreign minister allayed concerns that the situation would escalate further.
The Australian dollar remains under pressure against most global currencies as the wildfires continue to wreak havoc on the country. Highlighting the economic and political dangers of the wildfires, Australian Prime Minister Scott Morrison was jeered by victims of the fire as he pleaded for tourists not to be put off coming to the country.
Once the knee-jerk reactions to the Iran missile strikes had passed, the British pound made steady gains against the Aussie dollar in early trading on Wednesday since it tends to rise when risk appetite is strong or recovering. The gains swiftly turned to losses as fears of a no deal Brexit resurfaced, before the pound recovered again later.
