Sterling fell across the board on Monday, leaving a bearish outside day on the daily charts, as England entered a new national lockdown.
A close below Monday's 1.3544 base would create a key day reversal - a powerful signal of a change in trend.
Prime Minister Boris Johnson ordered a strong response to the more contagious coronavirus variant nL1N2JF09J after UK health chiefs warned parts of the health system could be overwhelmed by COVID-19 nL9N2IC00T.
The lockdown will extend until mid-February at this point and is similar to the restrictions imposed in March nL8N2JF4OZ.
Vaccines are being rolled out, but will take months to have a national impact nL8N2JF12X. The UK faces a tough winter.
Markets appear to be positioned modestly long sterling after the Brexit deal, while short dollar positions are significant nL1N2JF1YI.
Thus if GBP/USD positions are unwound, there could be significant selling.
Charts show neutral daily momentum studies, but 5, 10 and 21 daily, weekly and monthly moving averages continue to rise, which is a strong positive setup.
The 1.3677 level, 76.4% of the 2018-2020 fall, was tested and held on Monday's close, becoming a potential longer-term top.
A key day reversal would initially target the 1.3472 21 DMA, but could go further if the USD bounces after the Georgia vote nL1N2JF026.
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