GBPUSD Drops Ahead of Brexit Plan B

GBP Price Analysis and Talking Points:

• GBP Awaits Plan

• Eyes on Amendment

GBP Awaits Plan

Today‘s focus will center around the UK and Theresa May presenting her Plan B Brexit plans to the House of Commons, while the debate and vote will take place on January 29th. According to UK press reports over the weekend, the PM’s efforts to hold cross party discussions appears to be on hold for now, with Theresa May looking to get support from hardline Brexiteers in the Conservative Party and the DUP through renegotiating the Irish backstop. However, with little progress made, GBP is slipping ahead of the PMs address (1530GMT) with the markets viewing this as an unlikely way to get a Withdrawal Agreement passed.

Eyes on Amendment

With there being little progress made on Theresa Mays Plan B relative to Plan A GBP is on the backfoot. As such, eyes will be on a series of amendments. Those pertaining to an extension to Article 50 could see GBP supported as no-deal Brexit risks recede. However, given the uncertainty over Brexit and the lack of clarity, GBP rallies have been consistently faded.

GBPUSD PRICE CHART: Daily Time-Frame (Sep 2018 – Jan 2019)

Chart by IG

After a notable pullback from the 1.30 handle, GBPUSD has now broken below the 100DMA situated at 1.28889. Subsequently, opening the pair up for further losses with eyes on the 61.8% Fibonacci retracement of the 1.1800-1.4377 rise (1.2784).