GBP/USD pressured in the open, breaks below 1.30 the figure

• GBP/USD breaks below 1.30 the figure as Brexit fears resurface. 
• GBP/USD pressured with odds of BoE rate cut on the rise. 

GBP/USD opened with a gap to the downside of a handful of pips, but significantly, cable broke below the 1.30 handle for the first time since January's bullish correction from 1.2954. 

At the time of writing, GBP is trading at 1.30 the figure, having travelled between 1.3005 and 1.2989 the opening low – cable is under pressure on a number of fronts. 

BoE at the fore

Brexit has been the main catalyst resulting in years of economic stress for the UK. In recent weeks, the focus on the Bank of England has started to rub salt in the wound as well. Data of late has been disappointing and Friday's poor retail sales report was the final nail in the coffin for the analysts at TD Securities BoE call:

"We now look for a rate cut this month, plus a follow-up cut in May," the analysts proclaimed. "The economy seemed to be heading into 2020 on a much weaker footing than we had anticipated. We are skeptical that sentiment will pick up sufficiently in order to boost investment and growth to begin the year."

Should the BoE cut rates, a further 25bps rate cut in May will bring Bank rate back down to its all-time low of 0.25%. 

"That said we don't think that the economic situation warrants another QE programme just yet. A likely lowering of potential supply growth in this month's MPR means that not as much stimulus will be required to get GDP growth back up to potential," the analysts at TD Securities concluded. 

At the same time, GBP positioning in the near-term probably reflects market expectations of a rate cut at the next BoE meeting and pressures will likely remain until the end of the month when the BoE will deliver the verdict. 

The week ahead

Meanwhile, Brexit headlines will likely start to filter through thick and fast as we approach the end of the month whereby, assuming the European Parliament also gives the green light, the UK will formally leave the EU on 31 January with a withdrawal deal. We have already heard from Finance Minister,  Sajid Javid, in headlines today who declared that there will be no alignment with EU rules – more on that here.

• UK Tory, Sajid Javid, has admitted businesses will be hit by Brexit – Reuters

Elsewhere, we have plenty of events and data on the docket from central banks to UK Manufacturing PMI, Services PMI as follows:

• 21 Jan: BOJ Decision.
• 21-24 Jan: World Economic Forum in Davos.
• 22 Jan: Bank of Canada Rate Decision, Canada CPI Inflation (Dec), Bank of Canada Rate Decision.
• 23 Jan: ECB Decision, Australia Employment (Dec).
• 24 Jan: New Zealand CPI (Q4), UK and EU January Flash PMIs, Manufacturing PMI, Services PMI.

GBP/USD levels

• GBP/USD Forecast: Headed toward 1.2900