See also
The wave pattern for GBP/USD continues to indicate the formation of a bullish impulsive wave structure. The wave pattern is nearly identical to that of EUR/USD, since the U.S. dollar is the main driver across the market. Demand for the dollar is falling across the board, which is why many instruments are displaying similar dynamics. Wave 2 of the uptrend has taken the form of a single-wave structure. Waves 1 and 2 have been formed within the expected wave 3, so we should now expect the continuation of the British pound's rise as part of wave 3 of 3, which is currently underway.
It's important to keep in mind that much in the currency market right now depends on Donald Trump's policies—not only in terms of trade. Positive news may still emerge from the U.S., but the market remains focused on the prevailing uncertainty in the economy, Trump's contradictory decisions, and the hostile, protectionist stance of the White House. As a result, the dollar must work very hard to convert even good news into increased market demand, which it currently fails to achieve.
The GBP/USD rate remained nearly unchanged throughout Wednesday and rose slightly today. However, another fact is more important. After the Bank of England released the results of its fourth meeting this year, demand for the British pound began to rise again. I wouldn't say that the pound's strengthening is due to the Bank of England's decisions, since the interest rate was left unchanged and one-third of the MPC committee voted in favor of a rate cut. Therefore, a decline in demand for the pound would have been more expected.
It is worth noting that the current wave pattern does not suggest a significant decline in the instrument. Two essential corrective waves have already formed, meaning that the upward movement may continue. There is no news actively supporting the U.S. currency. Neither the Fed nor the Bank of England has made any decisions clearly signaling the market to buy dollars. Inflation remains high in the UK, while in the U.S. it is lower, but has been rising in recent months. As such, both central banks may remain on the sidelines in upcoming meetings. In light of this, the news backdrop remains the same—one that has led to a 15-cent decline in the dollar over the past five months.
I still believe that only the end of the Global Trade War could reverse the current trend. Jerome Powell is absolutely right in saying that no conclusions should be drawn until there is clarity on final import tariffs. Only when the market begins to understand that Trump has defined the final tariffs to be in place for the next several years, and signed trade agreements with specific countries, can we expect increased demand for the U.S. dollar.
The wave pattern for GBP/USD remains unchanged. We are dealing with an upward impulsive segment of the trend. Under Donald Trump, the markets could still face many shocks and reversals that might significantly affect the wave pattern. But for now, the working scenario remains intact, and Trump continues to do everything to reduce demand for the dollar. The targets for bullish wave 3 lie near the 1.3708 level, which corresponds to 200.0% Fibonacci relative to the presumed global wave 2. Therefore, I continue to consider buy positions, as the market shows no intention of reversing the trend.
On the higher wave scale, the wave structure has transformed. We can now assume the formation of a bullish trend segment, which at this point appears incomplete. For now, we can only expect a further rise.
Core principles of my analysis:
You have already liked this post today
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
In the coming trading days, the British pound is expected to continue its sideways movement. A return to the resistance zone is likely, followed by a possible reversal and resumption
In the coming days, the euro is expected to remain in a sideways flat phase. Near the calculated resistance area, there is a high chance of a pause
Forex Chart
Web-version
Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.
If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.
Why does your IP address show your location as the USA?
Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaTrade anyway.
We are sorry for any inconvenience caused by this message.