Global macro overview for 16/01/2017:

On Monday morning, the main market move on Forex was the British pound plunge, as fears of a "hard Brexit" has mounted in the recent week. According to reports from The Sunday Times, a speech by British Prime Minister Theresa May slated for Tuesday is widely expected to focus on the negotiations with the EU. Her main goals are the immigration control and liberation from the influence of the European Court of Justice. Tough stance on these matters by Mrs. May accounts for the loss of access to the UK single European market, which will be a serious blow to the UK economy.

Let's now take a look at the GBP/USD technical picture in 4H time frame after it slupmed below the level of 1.2000. Despite all of the concerns, the weekend gap down between the levels of 1.2085-1.2170 is likely to be filled soon and the growing bullish divergence between the price and the momentum oscillator supports the view. The next support is seen at the level of 1.2038 and the next resistance is seen at the level of 1.2121.