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It promises to be another dramatic day in London on Wednesday, as May follows a crushing defeat on her Brexit deal with a fight to save her government in a no confidence vote in parliament.

As it stands, the vote would appear to stand no better chance of succeeding in parliament than May's Brexit deal but as with much of what we're seeing, this is a process – a box ticking exercise – that allows MPs to move onto other solutions. Labour has repeatedly stated that its preferred alternative is an election and it would consider a second referendum if this failed, so this is the natural next step.

It is tempting to think that Corbyn would not have called a no confidence vote if he didn't think it could pass but the same was said in December when a similar vote was called in the Prime Minister. That attempt failed miserably, the only difference being that it cannot be repeated for another 12 months. The same is not true of today's vote which can be repeated as often as the opposition would like.

With that in mind, it's no surprise to see the pound relatively unchanged over the last 48 hours despite all of the volatility in the interim. Aside from certain processes being ticked off, we don't feel any closer to a deal actually being agreed in parliament. One thing that is clear is that the process has now been dramatically accelerated which should spur further volatility in the near term.

Attention won't shift far from London today, with the only notable economic events focusing around the UK. It's felt like a long time since the central bank was the centre of attention, both in terms of the Brexit debate – much to the relief of Governor Mark Carney – and interest rates which depend heavily on the debates taking place in parliament currently and the deal that's agreed upon.

We'll hear from Carney today as he appears alongside three of his colleagues in front of the Treasury Select Committee to discuss the financial stability report. As ever with these appearances, the committee will often stray from the intended subject and use the opportunity to get the Governor's views on the topic of the day. Well, no topic is more relevant and controversial on this day than Brexit, a topic Carney has been repeatedly pushed into giving his views on in the past, much to the anger of Brexiteers.

We'll also get inflation data from the UK this morning, but as mentioned above, this is bordering on irrelevant at a time when the future relationship with the country's largest trading partner is up in the air. Ultimately, the outcome of negotiations, debates and votes over the next couple of months will determine how interest rates behave, more so than inflation data for December. Especially given that the outcome will directly impact these figures, as it did in the aftermath of the referendum.

Market movers today

Markets will continue to digest yesterday's defeat of Theresa May's Brexit deal (see more below), while attention will also turn to whether May's government can survive the 'no confidence' vote called for today at 20:00 CET and what Plan B she will present to the Commons by Monday.

On the data front, UK inflation figures for December will probably show another decline in headline inflation from 2.3% in November on the back of lower energy prices. With inflation slowly heading back towards the target, we do not expect the Bank of England to be in a hurry to deliver its next hike, especially amid the ongoing Brexit uncertainty. We recently changed our call for the next BoE hike from May to November this year.

Selected market news

As widely expected, PM Theresa May's Brexit deal failed in the House of Commons . The defeat, however, was bigger than expected, 432 against versus 202 in favour. In Brexit Monitor: The waiting game - Brexit edition, 15 January, we argue some outcomes are still more likely than others despite us being in uncharted territory. The likelihood of an extension of Article 50 has probably increased, so that is also something we are set to monitor (officially, May still sticks to the plan of leaving the EU on 29 March). A majority in the House of Commons has clearly indicated it is against a 'no deal' Brexit, which would only happen by accident, as it is the default option (15% probability). We continue to believe the probabilities of a soft Norway-style Brexit and snap election are low (10% and 5%, respectively). The two most likely outcomes are either May's deal (or something very similar) passing at a later stage as pressure builds on the politicians or a second EU referendum (40% and 30%, respectively) but British politics need to settle before we find out which way the UK will go.

Yesterday, we got more dovish signals from the Fed. While it was not a surprise that the Fed's Kaplan said the Fed could wait and see for ' a quarter or two', it was more noteworthy that the Fed's George, normally considered a hawk, said that the Fed should continue ' with caution' and that it might be a good idea to ' pause Fed rate normalisation'. She also said the impact of the balance sheet policy was ' unclear'' Overall, a very dovish message supporting that the Fed is on hold for now and likely until the June meeting. The comments, together with expectations of tax cuts from China, probably supported risk sentiment and S&P ended 1.1% higher yesterday.

ECB President Mario Draghi was also dovish yesterday, saying ' there is no room for complacency' as 'recent economic developments have been weaker than expected' and ' uncertainties remain prominent'' He believes ' significant amount of monetary policy is still needed to support the further build-up of domestic price pressures'. In particular, we take note of the 'no room for complacency' comment, which opens up for a dovish message after the next ECB meeting on Thursday 24 January.

Daily Pivots: (S1) 123.35; (P) 124.10; (R1) 124.82; More....

Intraday bias in EUR/JPY remains neutral at this point, and outlook is unchanged. For now, we'd still expect strong resistance around 124.61 to complete the rebound from 118.62 low. Larger decline is expected to resume afterwards. Break of 123.40 will affirm our view and turn bias back to the downside for retesting 118.62 low first. However, sustained break of 124.61 will dampen our view and extend the rebound to 127.09 resistance next.

In the bigger picture, medium term rebound from 109.03 (2016 low) has completed at 137.49 already, with corrective structure. Fall from 137.39 is seen as a medium term fall, resuming the decline from 149.76 (2014 high). Such decline should break through 109.03 low next. This will remain the preferred case as long as 124.61 support turned resistance holds. Sustained break of 124.61 will mix up the outlook and we'll reassess on the final structure of the rebound from 118.62.

Daily Pivots: (S1) 0.8824; (P) 0.8905; (R1) 0.8955; More...

Despite having a strong but brief recovery to 0.8986, EUR/GBP is quickly back under pressure as fall from 0.9101 resumes. Intraday bias remains on the downside for 61.8% retracement of 0.8655 to 0.9101 at 0.8825. Sustained break there will pave the way back to 0.8655 support. On the upside, break of 0.8986 is needed to indicate short term bottoming. Otherwise, risk will stay on the downside even in case of recovery.

In the bigger picture, EUR/GBP is seen as staying in long term range pattern started at 0.9304 (2016 high). The medium term range is set between 0.8620 and 0.9101. Downside break out of 0.8620 will pave the way back to 0.8302/12 support zone. Break of 0.9101 will bring retest of 0.9304/5 resistance.

Daily Pivots: (S1) 1.5796; (P) 1.5876; (R1) 1.5922; More....

EUR/AUD's decline from 1.6765 extends to as low as 1.5806 so far and intraday bias remains on the downside. With 61.8% retracement of 1.5346 to 1.6765 at 1.5888 taken out, further decline should be seen to 1.5346 key support next. On the upside, break of 1.6154 resistance is needed to confirm completion of the fall from 1.6765. Otherwise, near term outlook is mildly bearish even in case of recovery.

In the bigger picture, the failure to sustain above 1.6587 key resistance (2015 high), argues that up trend from 1.1602 (2012 low), is not ready to resume yet. But still, as long as 1.5346 support holds, outlook will remain bullish. Break of 1.6765 will target 61.8% retracement of 2.1127 (2008 high) to 1.1602 at 1.7488 next. However, firm break of 1.5346 key support will indicate trend reversal, with bearish divergence condition in weekly MACD, and turn outlook bearish.

Daily Pivots: (S1) 1.1249; (P) 1.1269; (R1) 1.1293; More...

Intraday bias in EUR/CHF remains neutral and outlook is unchanged. We're still slightly favoring the case the choppy decline from 1.1501 has completed at 1.1181 already. On the upside, break of 1.1348 will confirm this bullish case and turn bias to the upside for retesting 1.1501 next. On the downside, in case of another fall, we'd expect strong support from 1.1154/98 support zone to contain downside to bring rebound.

In the bigger picture, price actions from 1.2004 medium term top is seen as a correction only. Downside should be contained by support zone of 1.1198 (2016 high) and 61.8% retracement of 1.0629 to 1.2004 at 1.1154 to complete it and bring rebound. A break of 1.2 key resistance is still expected in the medium term long term. However, sustained break of the mentioned support zone will mark reversal of the long term trend. In that case, 1.0629 key support will be back into focus.

Daily Pivots: (S1) 1.3231; (P) 1.3263; (R1) 1.3301; More...

Consolidation from 1.3180 is still in progress and intraday bias stays neutral first. Recovery should be limited by 1.3323 minor resistance to bring another decline. On the downside, break of 1.3180 will resume the fall from 1.3664 and target 61.8% retracement of 1.2781 to 1.3664 at 1.3118. We'll start to look for bottoming sign below there. On the upside, above 1.3323 will suggest short term bottoming and turn bias back to the upside for stronger rebound.

In the bigger picture, the medium term rise from 1.2061 (2017 low) might continue further. But the structure of such rise is not clearly impulsive so far. Hence, we'd stay cautious on strong resistance from 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685 and 1.3793 resistance to limit upside, and bring medium term topping. But in any case, medium term outlook will stay bullish as long as channel support (now at 1.2993) holds. Sustained break of 1.3793 will pave the way to retest 1.4689 (2015 high).

Daily Pivots: (S1) 0.7180; (P) 0.7203; (R1) 0.7227; More...

Intraday bias in AUD/USD remains neutral at this point. On the downside, break of 0.7116 minor support will suggest completion of rebound from 0.6722. Intraday bias will then be turned back to the downside for retesting this low. On the upside, above 0.7235 will extend the rebound. But upside should be limited by 0.7393 resistance to bring reversal.

In the bigger picture, the failure to sustain below 0.6826 (2016 low) suggests that the long term down trend is not ready to resume yet. But prior rejection by 55 week EMA indicates underlying medium term bearishness in the pair. Outlook will also stay bearish as long as 0.7393 resistance holds. On the downside, sustained break of 0.6826 will target 0.6008 (2008 low).

For the 24 hours to 23:00 GMT, the EUR declined 0.64% against the USD and closed at 1.1411, after the European Central Bank President, Mario Draghi warned that Euro-zone's economic growth has been weaker than expected, amid rising external headwinds.

Data indicated that the Euro-zone's seasonally adjusted trade surplus expanded to €15.1 billion in November, compared to a surplus of €13.5 billion in the previous month. Market participants has expected the region to post a surplus of €12.6 billion.

In the US, data showed that the US producer price index (PPI) fell to a two-year low level of 0.2% on a monthly basis in December, driven by lower oil prices and declines in trade services. In the preceding month, the PPI had recorded an advance of 0.1%, while markets participants had expected for a drop of 0.1%. Moreover, the nation's NY Empire State manufacturing index declined to a level of 3.9 in January, hitting its lowest level since May 2017 and following a revised reading of 11.5 in the preceding month. Market participants had anticipated the index to fall to a level of 10.0.

In the Asian session, at GMT0400, the pair is trading at 1.1407, with the EUR trading a tad lower against the USD from yesterday's close.

The pair is expected to find support at 1.1364, and a fall through could take it to the next support level of 1.1321. The pair is expected to find its first resistance at 1.1468, and a rise through could take it to the next resistance level of 1.1529.

Moving forward, traders would keep an eye on Germany's consumer price index for December, set to release in a while. Later in the day, the US business inventories for November, advance retail sales for December and the NAHB housing market index for January along with the MBA mortgage applications, will garner significant amount of investors attention.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

Daily Pivots: (S1) 108.28; (P) 108.53; (R1) 108.94; More..

USD/JPY is staying in right range below 109.08 temporary top and intraday bias remains neutral first. In case of another rise, we'd expect upside to be limited by 109.46 resistance to complete the rebound from 104.69 short term bottom. On the downside, below 107.77 will turn bias to the downside for retesting 104.69 low. However, sustained break of 109.46 will dampen our view and bring stronger rebound instead.

In the bigger picture, price actions from 125.85 (2015 high) are seen as a long term corrective pattern, no change in this view. Apparently, such corrective pattern is not completed yet. Fall from 114.54 is seen as part of the falling leg from 118.65 (2016 high). Break of 104.62 will target 100% projection of 118.65 to 104.62 from 114.54 at 100.51, which is close to 100 psychological level. But in that case, we'd expect strong support from 98.97 to contain downside to bring reversal. Also, this bearish case will remain the preferred one as long as 114.54 resistance holds.