Forex Today: Covid strains, US data and Georgia's critical elections on traders' minds

Here is what you need to know on Tuesday, January 5:

Markets are cautious after falling on Monday as worries about the new coronavirus strain prompted the third UK lockdown. Uncertainty about Georgia's special elections is looming as well. The ISM Manufacturing PMI stands out on the economic calendar.

Coronavirus: UK Prime Minister Boris Johnson announced a third nationwide lockdown that includes schools and is reminiscent of the harsh shuttering in the spring. The move came in response to a surge in COVID-19 infections that is overwhelming hospitals.

The new covid strain  B.1.1.7 is seen as responsible for the fast spread. Concerns are growing about the efficiency of vaccines against a different South African variant. The PM's exit strategy relies on vaccinations as Britain began administering the University of Oxford/AstraZeneca vaccine. The news weighed on the pound and also on broader markets.

Europe: Germany extended its lockdown to the end of January amid stubbornly high cases. Both Berlin and Paris were criticized for a slow pace of immunizations and vowed to ramp up distribution.

US politics: Citizens in the southern state of Georgia go to the polls to determine control of the Senate. Republican David Perdue competes with Democratic rival Jon Ossof and GOP Senator Kelly Loeffler battles Raphael Warnock. President-elect Joe Biden needs both Democratic candidates to win to obtain effective control of the Senate.

Gold prices remain elevated in anticipation of a Democratic win that would open the door to a multi-million relief package. 

See Georgia Elections Preview: Markets geared for a special moment, three scenarios

Outgoing President Donald Trump is still trying to overturn his loss ahead of a special session of Congress on Wednesday, causing a split within the Republican Party. Both uncertainties weighed on sentiment on Monday. 

The ISM Manufacturing Purchasing Managers' Index for December is set to show ongoing growth in the industrial sector. The publican and its employment component serve as hints toward Friday's Nonfarm Payrolls.

See Manufacturing PMI Preview: COVID is the present but recovery is the future

Oil prices are stabilizing around $47 after the OPEC+ gathering on Monday ended without a conclusion. Talks about production cuts continue on Tuesday. 

Bitcoin is trading around $31,000, off the highs but on high ground. JP Morgan suggests the cryptocurrency's price could hit $146,000. Ethereum is changing hands around $1,000, while Ripple remains on the back foot. 

More Best Stocks to Buy Forecast 2021: Vaccines and zero rates to broaden recovery