It’s incredible to think that back in April last year; we were only 4% off the prices last seen in the run-up to the Brexit referendum. After a rampant dollar and endless political chaos, the second half of 2018 saw us reach 17.5% off those levels. GBPUSD saw further weakness last Thursday as the pound dropped to its lowest level in 21 months. Since then, sterling has bounced back sharply on the back of weakness of the dollar, with GBP appreciating 3% against the greenback.

There is a long-term trend resistance that holds the weekly highs through April 18, Nov 18 and Jan 18. This is a strong sign if we push up through here with a lot of price action between 1.2776/1.2867 - which has held trading and supported it since July 2016. This is situated just before a big 23.6% fib (Apr 18 high to Jan 19 low) at 1.28986. Overcoming this zone, which will need a further downturn in the dollar or some very positive Brexit news, and we may start to aim for the upper trend channel line which has been capping prices since May 18 and currently sits around 1.30.

 If the house miraculously passes the withdrawal bill then the sky’s the limit, and moves up to 1.35/1.40 entirely possible. If we don’t get that agreement and we start to head towards breaking away without a deal in place, it’s all going to be down to sentiment and how well the UK have planned. Blind panic may ensue and we could be heading back down to the 2017 lows of around 1.21/1.19. Further back, 2016 lows printed as far down as 1.17. Anything below that would be levels not seen since 1985, where the pound was almost trading at parity with the dollar.

Brexit GBPUSD LP 140119

Against the euro it’s a different story, as the shared currency strengthened to levels not seen since September 2017. If this increasing uncertainty does not shift, then EURUSD could continue to build on last Thursday's highs and push up to the August 2017 highs of 0.93 and even the post-Brexit referendum highs of 0.95.

However, positive news will no doubt drive prices back in sterling's favour.  There has been strong support since June 17, with a price between 0.87/0.86 potentially coming under pressure. After the vote, a large support area built up around 0.83, which would come into focus if the sterling starts to dramatically fight back.

Brexit GBPUSD LP Support 140119

The UK 100, like most European equities, has been under heavy pressure since the second half of the year. Recent lows stopped just short of the November 2016 lows. Since the EU referendum vote, the UK 100 has rallied; this is down to an upturn in equities across the globe as well as a majority of the UK 100 firms converting dollars to sterling when reporting profits. A deal is the best outcome and it’s possible a positive reaction may drive up UK 100 in the short term, but be careful on the strengthening pound. There is a large 61.8% fib which sits at 6,417, also a now broken resistance area back from 2015 and early part of 2016 which may act as support on the retest. To the upside, the most stand-out level is the November highs at 7,193 and the 50% retracement at 7,222, a potential zone which has attracted resistance prior and is now backed up with a long term major fib.

Support 2 GBPUSD 140119