The wave marking for the pound/dollar instrument required clarifications, which were made. The upward wave constructed between May 13 and May 27 does not currently fit into the overall wave picture, but it can still be regarded as a segment of the downward trend. Thus, we can now definitively state that the building of the upward correction phase of the trend has been canceled, and the downward component of the trend will have a longer and more complex shape. I'm not a big fan of continually complicating the wave marking when dealing with a highly elongating trend zone. I believe it would be far more efficient to recognize rare corrective waves, following which new impulse structures may be constructed. Now that waves 1 and 2 have been completed, we may infer that the instrument is in the process of constructing wave 3. However, this wave proved unconvincing (if finished now), as its low is not significantly lower than wave 1's low. Consequently, the current downturn cannot be characterized as impulsive, but it may be a complex correction. Focus on the wave marking of the EUR/USD instrument in this regard.
The British inflation rate continues to grow.
The exchange rate between the pound and the dollar declined by 20 basis points on July 20. Since the day began with a rise in quotes, the decline closer to the equator of the day was hardly noted. The euro and the pound fell simultaneously, although the European currency lacked a news background today. In the morning, crucial inflation data was released in the United Kingdom, on which the Bank of England's monetary policy hinges. Let me remind you that as inflation rises, the central bank should adopt increasingly rigorous measures. Unless, of course, it has a firm objective to decrease inflation at all costs. According to the remarks of Andrew Bailey, the Bank of England has this objective. Therefore, a rise in inflation to 9.4 percent would require the Bank of England to hike interest rates by 50 basis points at its next meeting.
At first look, this is fantastic news for the pound. By the time the next Bank of England meeting occurs, the instrument may have completed the creation of the final five-wave structure, which has a complex corrective shape. Therefore, I have no reason to expect the British to experience the same steep collapse as Europe. This entire segment of the trend can be concluded if prices fall only marginally below the low of wave 3's anticipated trough. After that, the pound will have another chance to construct an upward trend segment, if not a corrective one. And the Bank of England's decision to increase the rate by 50 basis points may greatly assist him in this regard. Thus, regardless of how bleak things appear for a Briton at the time, there is always hope for a prosperous future. There is, of course, the Fed, which is expected to continue raising rates because market sentiment will determine a great deal.
General observations.
The increased complexity of the wave structure of the pound/dollar pair signals a further downturn. For each "down" MACD signal, I recommend selling the instrument with objectives at the estimated mark of 1.1708, corresponding to 161.8 percent Fibonacci. Now, there is a prospect of an upward wave forming, but I do not anticipate it to be robust and protracted.
At the higher wave scale, the image closely resembles the euro/dollar instrument. The same ascending wave does not conform to the present wave pattern, followed by the same three descending waves. Thus, one thing is unmistakable: the downward segment of the trend continues to develop and can reach practically any length.