Global macro overview for 07/10/2016:
Just like yesterday's comments regarding Brexit from German Chancellor Angela Merkel, today's remarks of French President Francois Hollande were rather harsh for all Brexit supporters. Hollande said Britain would have to pay the price for leaving the EU, calling on member countries to respond with "firmness" in order to save the institution from an existential crisis. Moreover, he added: "The UK has decided to do a Brexit, I believe even a hard Brexit", so those statements are rather bold and leave no doubt about how the eurozone policy-makers will negotiate with the United Kingdom's politicians.
Let us now take a look at the GBP/USD technical picture on the daily time frame. Hollande's comments might be the reason behind the 6% flash crash in the recent Asian trading hours. The low in this pair is now a the level of 1.2028 and the next important resistance is at the level of 1.2791. Good news for bulls is that the growing bullish divergence between the price and the momentum oscillator might suggest that the British pound might have just established a multi-year low.
