The opening of a new front in the conflict between Israel and Iran has brought geopolitical risk straight back into the foreign exchange calculus. After the Israeli strikes Friday morning, the dollar witnessed an element of the “flight-to-safety” characteristic traditionally associated with military escalation but as ING points out in its daily research note,

The pound fell on Friday, in sync with other volatile currencies such as the Australian dollar, after Israel launched a flurry of strikes on Iran, sending investors scurrying into the relative safety of the dollar.