FX.co ★ EUR/USD and GBP/USD: UK introduces new restrictions amid rising COVID-19 infections. The euro and the pound will continue to be in demand, but under a number of conditions.

UK Prime Minister, Boris Johnson, has announced new local restrictions related to the coronavirus, and the reason for this is the massive increase of infection rates recorded in various parts of the UK. So, starting from Wednesday, three new levels of anxiety will be introduced - medium, high and very high, but even so, schools and retail outlets will continue to operate, as no one is planning to close them yet.

At the same time, a rather interesting statement was made by the WHO yesterday, as representative Melita Vujnovich proposed to stop the imposition of strict quarantine measures, which contrasts the organization's recommendation six months ago - to undergo complete isolation during the pandemic, which led to the sharp collapse of the world economy. Vujnovic said that today's response should not be the same as in February, especially since the world already partially knows the virus and that there is already an understanding on how to deal with it further. The imposition of severe social restrictions will only worsen the economy and cause irreparable harm to it, thereby making the poor even poorer. She also noted that quarantine measures will hit not only the economy,

Another factor that puts pressure on the British pound was the news that the Bank of England is asking British banks on how prepared they are for a zero or negative interest rate, which confirms the intention of the Central Bank in resorting to softer monetary policy. Deputy Governor Sam Woods has already announced that specific information on the current readiness of the business to deal with a zero or negative bank rate, as well as a multilevel system for creating reserves, is already being requested.

However, amid all these negative news, the British pound continues to float, even managing to renew monthly highs. Apparently, the increasing possibility of a post-Brexit deal is preventing the currency from declining, and the success of which will definitely trigger a new wave of growth in the GBP / USD pair.

But, traders should also be prepared in case negotiations fail this week, as such would put even more pressure on the British pound.

So, for the technical picture of the GBP / USD pair, the bulls need to push the pound above the resistance level of 1.3080, in order to reach a quote of 1.3155 or 1.3240. On the other hand, the pound will drop down if the price returns to the support level of 1.3000, and such will quickly push the pair to a quote of 1.2930 or 1.2845.

As for the European currency, it is currently trading in a narrow sideways channel, after stopping yesterday at monthly highs. The bullish momentum has completely dwindled after increased speculation that the European Central Bank may increase its quantitative easing program, as its chairman, Christine Lagarde, has repeatedly stated this last week. The main problem in Europe is the slowdown and stagnation of economic indicators after growing sharply in the 3rd quarter, which signals the possibility of additional stimulus measures.

Meanwhile, data on German inflation will be released today, which, if reveals a slowdown in inflationary pressures, will serve as an additional signal that the ECB will not wait long in expanding the PEPP program.

Back to the EUR/USD pair, resistance is seen on the level of 1.1830, but a breakout from which will lead to automatic triggering of sell stop orders and a new jump of the trading instrument up to the highs of 1.1870 and 1.1915. The key target of the bulls remains the psychological mark in the area of the 20th figure.

However, if pressure on the euro returns this week, the pair will head towards the support level of 1.1780, and then decline to a quote of 1.1735.