GBP/USD drops to session lows, recovers to 1.3150 as Brexit Plan B debate continues

The GBP/USD pair came under a renewed selling pressure in the last hour and dropped to a fresh session low of 1.3130 before recovering modestly. As of writing, the pair was down 0.1% on the day at 1.3150.

Several news outlets recently reported that the European Commission's President, Jean-Claude Juncker, is planning to tell British Prime Minister Theresa May that the Brady amendment, which aims at replacing the Northern Irish backstop with an alternative, wouldn't work, shutting the door on the possibility of renegotiation of the Brexit deal. "The EU is preparing to issue an immediate rebuff to Theresa May by publishing a statement rejecting any renegotiation of the withdrawal agreement in the event of the so-called Brady amendment being passed by parliament," the Guardian reported. 

With investors already aware of the EU's stance on the matter, the market reaction to these headlines remained short-lived.

On the other hand, following a weak recovery attempt toward the 96 handle, the US Dollar Index lost its momentum and allowed the pair to pull away from lows. The data published by the Conference Board on Tuesday showed that the consumer confidence in the U.S. continued to deteriorate in January. Ahead of tomorrow's FOMC meeting, the greenback is unlikely to find strong demand. 

Technical levels to consider

The initial support for the pair aligns at 1.3130 (daily low) ahead of 1.3015 (Jan. 24 low) and 1.2965 (200-DMA). On the upside, resistances are located at 1.3200 (daily high/psychological level), 1.3260 (Oct. 12, 2018, high) and 1.3300 (Sep. 20, 2018, high).