The wave layout of GBP/USD looks complicated for the time being, though it doesn't require any revision. The upward wave that was built between May 13 and 27 doesn't fit into the whole wave picture. Still, we can consider it corrective within the downward trend section. Thus, we can drawthe conclusion that the downward section is taking a more elongated and complicated shape. We see complete waves a, b, c, and d. So, we suggest the currency pair is still developing wave e. If this assumption is true, the currency pair might continue its decline in the near term. Let me remind you that both impulsive and correctional layouts may get complicated and elongated. Amid the fundamentals and the fact that the US Fed is not going to make a pause in the cycle of rate hikes, the whole downward trend section might turn into a more extended shape. The wave layout of the euro and the sterling are a bit different. The downward section for the euro looks impulsive. Upward and downward waves alternate in almost the same way. The sterling is now going through a correction. This fact enables the sterling to complete in theory wave 3 at around the 161.8 Fibonacci level.
GBP/USD may take breather until Friday
GBP/USD neither declined nor rose on August 30. The trading instrument made narrow fluctuations within 35 pips. Traders could not decide on their sentiment on the pound sterling. Let's wait for the news and macroeconomic data and until the market wakes up and decides on the sterling's trajectory. The market might take several decisions. The wave picture admits that the downtrend section might come to an end and both wave layouts for the euro and the sterling might coincide at this moment.
I reckon it will be this way. At the same time, both wave layouts can get more complicated if the market decides to sell both trading instruments. Once again, a particular scenario will depend on the news background and the market response to it. It is no secret that the market is not obliged to behave in an expected way. In other words, the market might decide to go long even amid a weak news background. For the time being, market participants are still poised to buy the US dollar, though economic conditions in the US and the UK are similar. Both economies are on the verge of a recession. Interestingly, demand is growing only for the US dollar. The Bank of England is tightening its monetary policy at the same pace as the US Fed. Nevertheless, it is the US dollar that is strengthening, not the pound sterling. From my viewpoint, the downward wave could be in progress for a while, but we should be ready for its completion.
The economic calendar is empty for the UK. The highlight of the week is certainly the US nonfarm payrolls which are due on Friday. For the remaining two days until the event, GBP/USD might come to a standstill and trade flat.
The wave layout for GBP/USD suggests lower demand for the sterling. I would advise you to goahead with selling the currency pair with the targets at about 1.1112 which matches the 200.0% Fibonacci level at every MACD down signal. To be sure of a successful breakout of 1.1708, we need to wait for a while to check that the instrument has settled below it.
On longer time frames, the wave layout resembles the one for EUR/USD. The ongoing upward wave also doesn't fit into the overall wave structure. It is followed by three downward waves. All in all, the downward trend section is still underway. It could last indefinitely.