Pound Mixed Ahead Of U.K. Parliamentary Vote

The pound turned mixed against its most major counterparts in the European session on Tuesday, ahead of the much awaited U.K. Parliamentary vote on the government's Brexit deal tonight, which is expected to be defeated by the lawmakers.

The deal is likely to rejected by a margin of 200 in the 650-seat chamber. The vote will start at 19:00 GMT.

The opposition Labour party, led by Jeremy Corbyn, vowed that he would call a vote of no confidence in the government "soon" after the deal is voted down by Parliament.

In a speech on Monday, Prime Minister Theresa May appealed to MPs to back her deal, as the alternatives to deal would be either leaving the EU without an agreement, or no Brexit at all.

Should the deal is rejected by MPs, May should come back to Parliament with a "Plan B" in three days.

Meanwhile, European shares rose after the U.S. earnings season began on a positive note and China signaled more supportive measures in the near term to counter slowing growth.

The currency was higher against its major opponents in the Asian session amid risk appetite, as Chinese finance ministry said that it would implement larger tax and fee cuts to help reduce burdens for small firms and manufacturers.

Having advanced to a new 2-week high of 140.43 against the yen at 12:45 am ET, the pound reversed direction with the pair trading at 139.31. Next key support for the pound is possibly seen around the 137.00 level.

Data from the Bank of Japan showed that the M2 money stock in Japan was up 2.4 percent on year in December, coming in at 1,014.2 trillion yen. That was in line with expectations following the 2.3 percent gain in November.

The M3 money stock climbed an annual 2.1 percent to 1,011.9 trillion yen - unchanged and in line with forecasts.

The pound reached as low as 1.2830 against the greenback, down from a high of 1.2915 touched at 8:30 pm ET. The pound is likely to challenge support around the 1.26 area.

The pound appreciated to 0.8879 against the euro, reversing from a low of 0.8914 seen at 6:00 pm ET. If the pound rises further, 0.86 is possibly seen as its next resistance level.

Preliminary data from the Federal Statistical Office showed that Germany's economy grew for a ninth year in 2018, but at the slowest pace in five years, largely driven by domestic demand.

Gross domestic product rose a price-adjusted and chain-linked 1.5 percent from 2017, when it expanded 2.2 percent. The pace exceeded the average 1.2 percent growth rate of the last ten years.

The U.K. currency rose to 1.2694 against the Swiss franc, its biggest level since December 7, 2018. On the upside, 1.28 is likely seen as the next resistance for the pound.

Looking ahead, U.S. PPI for December and New York Fed's empire manufacturing survey for January, as well as Canada existing home sales for December are scheduled for release in the New York session.

At 10:00 am ET, European Central Bank President Mario Draghi will testify on the bank's 2017 Annual Report before the European Parliament in Strasbourg.