Global macro overview for 21/08/2017

Global macro overview for 21/08/2017:

The UK Prime Minister Theresa May's government declared that it's stepping up pressure on EU to move the Brexit negotiation into trade agreements as soon as in October. According to Brexit Secretary David Davis "with the clock ticking, it wouldn't be in either of our interests to run aspects of the negotiations twice", he wrote in UK newspaper Sunday Times. Moreover, he argued that "it is simply not possible to reach a near-final agreement on the border issue until we've begun to talk about how our broader future customs arrangements will work. Furthermore, if we get the comprehensive free trade agreement we're seeking as part of our future partnership, solutions in Northern Ireland are easier to deliver." From the EU side, the chief Brexit negotiator Michel Barnier responded: "the quicker we can discuss customs & future relationship, the quicker an agreement was found on the breakup topics".

In a paper called "Future Customs Arrangements", the UK government started releasing a series of policy documents for Brexit negotiations, covering topics such as Northern Ireland and the customs union. One of the most important issues of the UK-EU negotiations, an arrangement that allows movements of goods across the borders of EU member states without tariffs, had been often criticized by UK businessmen. They argued that without a practical and convenient way to regulate the customs, the paper indicated that leaving the EU represents leaving the EU Customs Union, which is not in the interest of the UK business and might heavily impact the UK trade balance, sales, and consumer spending. As a result, it might heavily influence the British Pound exchange rate as well. The next round of Brexit talks will start on 29th of August.

Let's now take a look at the GBP/USD technical picture at the H4 time frame. The market is trading in a narrow range between the levels of 1.2831 - 1.2932 after a bounce from the 61%Fibo at the level of 1.2847. The whole zone between the levels of 1.2793 - 1.2861 is a strong support zone and any violation of this zone will open the road towards the level of 1.2709 and 1.2635.


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