Global macro overview for 17/01/2017:
The UK macroeconomic data release at 09:30 am GMT and Prime Minister Theresa May speech later on are the main market movers for the pound sterling. The first series of data from the UK are PPI Input, PPI Output, and CPI Core. These reports are quite important for Bank of England monetary policy projections. Market participants expect CPI to increase slightly to the level of 0.3% from 0.2% a month ago, which means higher inflationary pressure that is welcomed by BoE. On the other hand, Theresa May's speech can once again cause fear among investors about the so-called "hard Brexit" and it will definitely weaken the British Pound.
Let's now take a look at the GBP/USD technical picture in 4H time frame. From a technical point of view, the clear downward trend prevails, so strong statements about the UK exit from the EU can very easily bring the market back down again. Besides, keep in mind that good data (better than expected) and a neutral speech by Theresa May can cause temporary strengthening of the Pound against the Dollar. The consequence of this might be at least a major upward correction of GBP/USD. Currently, the market is trying to close the weekend gap between the levels of 1.2085 - 1.2169. The next immediate resistnace is seen at the level of 1.2121 and the next support is seen at the level of 1.2038.
