UK's Sunak to extend business support loans as COVID-19 spread worsens – FT

The Finacial Times reports that British Finance Minister Rishi Sunak will extend business support loans as COVID-19 spread worsens.

Sunak is expected to unveil plans to extend its four loan schemes for applications until the end of November, with banks allowed to process loans until the end of the year, the newspaper said.

Government weighs whether more aggressive measures needed to control virus in UK,

the FT wrote. 

The prime minister Boris Johnson confirmed last week that the UK is seeing a second wave coming in. 

Speaking about measures, the PM said, “We want to keep the schools open – that’s going to happen. And we’ll try and keep all parts of the economy open, as far as we possibly can. I don’t think anybody wants to go into a second lockdown.

“We’ll be looking at the local lockdowns we’ve got in large parts of the country now, and see what we can do to intensify things.”

With cases doubling in the space of a week and positive tests surpassing 4,000 on Friday, Downing Street is considering a “circuit-breaker” that could see pubs and restaurants forced to close early or go takeaway-only for a short fixed period, and families told not to mix.

Market implications

GBP/USD is firmer in the open, potentially attributed to the news of fresh stimulus measures.

However, the pound is vulnerable to a position clear out with the CFTC data showing that longs have decreased by 11K.

With the technical indicators still showing cable in bullish territory, there needs to be some further confirmation on the 4HR time frame that a phase of distribution is underway, in the spot market at least. 

The spread of the virus, to a large extent, has been expected and if it not for the recent weakness in the dollar, the pricing in of COVID-19 risk would likely be more visible. 

However, price action will continue to be dominated by the UK-EU trade negotiations news flow as well, with the next round of talks scheduled for this week.

The odds of a no-deal Brexit are high and the full extent of that risk premia likely has more room to go which would hamstring cable on rallies, no matter what stimulus measures might come of Sunak's unveiling in coming days. 

Since the following analysis, GBP/USD Price Analysis: Testing strong resistance area, bears waiting to fade, the pound has been a fade on rallies and bearish prospects are mounting. 

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