Global macro overview for 18/01/2017:
During the speech in London yesterday, UK Prime Minister Theresa May revealed her point of view regarding the Brexit negotiations. She said, "I want the United Kingdom to come out of this period stronger, fairer, more united and more oriented towards the outside, than ever before. We will not be any longer in the single market". Prime Minister assured that the citizens of European Union countries will "still be welcome" in Britain and that she wants as soon as possible to guarantee their rights. May added the fact that the exit from the European Union means full control over the movement of people and services. In the case of immigrants, borders are to remain open as wide as possible, in particular for highly-skilled specialists. She emphasized that her country does not want to try to be "half-present" in the EU. The United Kingdom plans to fully exit the European single market, however, they want to negotiate a new and best possible trade agreement, which will enable UK companies to sell their products in the EU and vice versa. So European companies will be given the widest possible access to the UK market. In conclusion, Theresa May speech presented a smooth, orderly Brexit plan with much room for negotiations.
Let's now take a look at the GBP/USD technical picture in 4H time frame. The pair rallied the most since 2008, a 2.8% in a single day, during and after the Prime Minister speech. The gap between the levels of 1.2085 - 1.2168 was easily filled and the price has stopped just below the level of 1.2432. Currently, the market is in the corrective cycle and the price is trading at the technical support at the level of 1.2317. Please notice, that if the level of 1.2432 is violated, then the next technical resistance is seen at the level of 1.2729.
