British pound in a tight range as England starts new lockdown
The British pound is little changed as traders reacted to the new lockdown in the United Kingdom. In a statement yesterday, Boris Johnson announced that England will start a four-week lockdown as the number of Covid-19 cases increased. The decision came after the UK passed the 1 million cases milestone during the weekend. In the statement, he said that people will only be able to leave their homes for specific reasons like education, health reasons, and to shop for food. As a result, the government will continue implementing some of the support measures like the furlough program, which risks pushing the public debt to the highest level ever. Later today, the sterling will also react to UK October PMI data.
Crude oil price is down to a five-month low as traders remain concerned about low demand and high supplies. Brent, the international benchmark, is down by 3% while the West Texas Intermediate (WT) is down by more than 3.45%. Over the weekend, the number of Covid-19 cases reportedly rose around the world, risking additional lockdowns, which will affect demand. At the same time, there are signs that oil supplies will keep rising. On Friday, data by Baker Hughes showed that the number of oil rigs in the United States rose for the sixth week in a row. The rigs rose by 10 to 221 last week, pushing the number of active rigs to more than 221.
The focus among investors will be on the upcoming US election. Recent polls have shown that Joe Biden has a ten-point lead nationally. The polls are relatively close in the battleground states. In addition, traders will be watching out for PMI numbers from Markit. Earlier today, data from China showed that the PMI rose from 53.0 to 53.8, which is a sign that the economy is recovering. Other key PMIs to watch will be from the European Union and the United States.
The GBP/USD is in a tight range today as traders reflect on the new lockdowns. It is trading at 1.2935, which is slightly above the intraday low of 1.2915. On the four-hour chart, the price is between the pink descending channel. It is also slightly below the 25-day exponential moving averages (EMA). The relative Strength Index (RSI) is at the neutral level of 42. Therefore, the pair will likely continue pushing lower as bears aim for the lower side of the channel at 1.2878.
The EUR/USD pair dropped to a low of 1.1640, which is the lowest it has been since September 28. The reason for the decline is the rush to safety ahead of the upcoming election and the rising risks of additional lockdowns. The price has moved below the short and medium-term moving averages. The awesome oscillator has also dropped to the lowest level since September. This is a sign that bears have taken over, which means that the price will continue falling, possibly to 1.1600.
The AUD/USD price dropped to the lowest level since July. The pair is trading at 0.7015, which is slightly below the 15-day and 25-day exponential moving averages. The moving average of oscillator and the awesome oscillators are also below the neutral level. Therefore, the pair is likely to continue falling as bears attempt to move below 0.7000.