Global macro overview for 28/03/2018:
Despite thousands of protesters in the UK marched against Brexit on March 25, Prime Minister Theresa May will trigger Article 50 of the Lisbon treaty on Wednesday, March 29. This will be the starting point of the 2-year Brexit negotiation process with the European Union. The guidelines on the UK's exit from the EU will be discussed at the next Eurozone summit on April 29. Currently, there are three possible scenarios for the negotiations: soft Brexit, hard Brexit or no deal. Presumably, the European Union is not interested in making the exit process easy for the British people, as the EU officials are likely to make a scapegoat out of the UK, thus preventing other members of the union from thinking of leaving the EU. The list of current issues to be negotiated with the EU is quite long: the new post-Brexit trade agreement, tariffs, transportation, financial services, fishing waters, and reducing the number of EU immigrants entering the UK. In conclusion, the pressure on the British pound may intensify in the coming days. Besides, volatility may increase as the negotiation will start.
Let's now take a look at the GBP/USD technical picture on the H4 time frame. Bulls have managed to bounce from the techical support at 1.2532, and currently the price is heading towards the next resistance at 1.2615. Nevertheless, the most important resistance is still the gray rectangle zone. The overbought market conditions and growing bearish divergence may prevent the price to break out higher for now.
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