The wave structure of the upward trend section has again taken on a fully completed form. Seemingly, the wave Z is already complete so the entire upward trend can be completed, and the instrument, in this case, has already moved on to building a new downward trend with the first targets located around 25th and 27th figures. However, the movement of the pound sterling will mostly depend on the news background. In recent months, the US dollar has dropped significantly against the pound solely due to the negative news background from the US. Now the situation may reverse as the news coming from the UK has initially turned out to be quite disappointing.
The current wave pattern suggests that the upward trend and wave Z, have become more complicated. The wave c in Z, in particular, has significantly lengthened, while the wave 4 in c in Z has already established a triangle formation. However, the current wave pattern allows us to assume the completion of the construction of the upward trend section, thus, the working option now is to build a downward wave, the first in a new downward section.
The news background from the UK has been controversial over the past week and has so far been negative for the current week. British Prime Minister Boris Johnson issued a statement that the parties must complete negotiations by October 15, and if by that time they still fail to agree on a free trade agreement, then the parties will trade with each other from 2021 according to the WTO rules.
"We are entering the final phase of our negotiations with the EU. The EU was very clear about its timetable. So was I. The agreement with our European friends should be ready for the meeting of the European Council on October 15, so that it can enter into force by the end of the year. If we cannot agree by then, both sides will have to accept it and move on, "Johnson said.
At the same time, information was received from the British Parliament that London may simply abandon certain clauses of the Brexit agreement. We are talking about the control regime, checks on the border between Northern Ireland and Ireland. It was the complete settlement of all issues on the Northern Ireland border in October last year that allowed the parties to move forward in the negotiations.
Brussels is now expressing extreme frustration at the fact that London may simply refuse to comply with the terms of the agreement that are disadvantageous to it. Michel Barnier has already turned to his colleague David Frost for an explanation. In any case, the bill should be published only tomorrow and conclusions can only be drawn tomorrow. However, if this bill fails to be passed tomorrow, it could further worsen relations between the EU and Britain and reduce the demand for the pound sterling.
General conclusions and recommendations:
The Pound-Dollar instrument has supposedly completed the construction of the upward wave Z. Thus, I would now recommend selling the instrument with targets around 1.3158 and 1.2960, which corresponds to 161.8% and 127.2% Fibonacci. The upward part of the trend can take on a more complex form, but for this, you need to wait for a successful attempt to break the current high of wave 5 in c in Z.