The UK government announced a new, one-month, lockdown over the weekend starting this Thursday. The second nationwide lockdown will see schools and universities remain open however and the government says that at the end of the lockdown, the country will go back to the current tiered system. There remains concerns however that the data that the government is using to justify a new lockdown are out of date and may be too high, according to a report in the Daily Telegraph. The numbers from Cambridge University suggest daily fatalities could hit 4,000 early next month, while the report drawn up three weeks ago suggests daily fatalities should currently be around 1,000 per day compared to last week’s daily average of around 250.

Trade talks between the EU and UK will continue today with media reports suggesting that the two sides are moving closer to a deal on fisheries. Clement Beaune, French Minister of State for European affairs said over the weekend that fisheries is equally important to both sides and that a solution should be found that respects the interests of both parties.

The FTSE 100 is trying to claw back some of its recent heavy losses although the move lacks conviction. The index held above the 23.6% Fibonacci retracement level at 5,464 during last week’s sell-off, while the upside is likely to be contained by a cluster of recent support levels which have now turned to the resistance between 5,714 and 5,763. Note also that all three simple moving averages may also curb any rally.

FTSE 100 DAILY PRICE CHART (JANUARY – NOVEMBER 2, 2020)

GBP/USD continues to slide lower, with the US dollar the driver of the move. After making a multi-week high of 1.3184 on October 21, the pair have moved ever lower, making a short-term series of lower highs. If the sell-off continues, the pair may attempt to breach the multi-month low around 1.2675. The CCI indicator is showing the pair as oversold, while the US dollar basket chart shows the greenback as being overbought in the short-term. The US dollar will continue to form GBP/USD price action this week with tomorrow’s US presidential elections the main driver.

GBP/USD DAILY PRICE CHART (JANUARY – NOVEMBER 2, 2020)

IG client sentiment data shows 46.47% of traders are net-long with the ratio of traders short to long at 1.15 to 1.We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise. However, the combination of current sentiment and recent changes gives us a further mixed GBP/USD trading bias.