For the pound/dollar instrument, the wave marking looks quite complicated at the moment but still does not require any clarification. We have a supposedly completed downward trend segment consisting of five waves a-b-c-d-e. If this is indeed the case, the increase in quotes has begun and continues within the framework of wave 1 of a new upward trend segment. Unfortunately, there is no confidence in this particular scenario since the instrument must go beyond the peak of the last wave to show us its readiness to build an upward section of the trend and not complicate the downward one once again. The peak of the nearest wave is located at about 23 figures. Thus, even after the pound has increased by 1000 points, you need to go up another 1000 points to reach this peak. This is a very significant distance. I understand that now many people have seen strong British growth in a short time, so they are "itching" to make purchases. However, let me remind you that even if the upward section has started building now, we should see another downward correction wave (after the completion of 1). If the quotes do not fall below the low wave e (which is very difficult, but not impossible), then you can also expect to build a new upward wave 3 and buy.
Payrolls and the Bank of England will decide the fate of the pound.
The exchange rate of the pound/dollar instrument decreased by 50 basis points on October 6, and this is the second day in a row when the British dollar has been declining. So far, its decline does not cause concerns that the downward section of the trend may resume. Its completion looks very convincing, but let me remind you that, at the same time, the continuation of the construction of the descending section for the euro is estimated as very likely. I don't think the British and the Europeans will trade in different directions. Therefore, someone will have to change their wave markup. So far, the euro has more chances to change it. But this is only from the point of view of waves, because the news background remains unfavorable for both currencies and may lead to a new drop in demand for them.
The British pound has already recovered after the Bank of England started a new purchase of long-term bonds. The British dollar has already managed to recover, but its further increase raises questions. The Bank of England will continue to buy bonds at least until October 14, and this, let me remind you, is a "dovish" measure designed to support the economy or markets. Thus, the British regulator simultaneously tightens and softens monetary policy, which raises many questions. His desire to stabilize the debt market is understandable, but the economic situation in the UK is unstable, which means new measures may be needed to stimulate the economy. At the same time, the market is now more inclined to the fact that the regulator will continue to bend its main line with rates – to raise them by 50 basis points at each meeting. There was also an opinion that at the next meeting we will have an increase of 100 points at once, but I don't believe it yet. If this happens, the demand for the British will grow.
The wave pattern of the pound/dollar instrument suggests a new decline in demand for the pound. I advise now selling the instrument, as before, on the MACD reversals "down." It is necessary to sell more cautiously since, despite a strong decline, a downward trend section could be constructed. There should be a decrease in any case since a correction wave 2 is needed. And this implies a decrease in the instrument by 300-400 basis points.
The picture is very similar to the Euro/Dollar instrument at the higher wave scale. The same ascending wave does not fit the current wave pattern, the same five waves down after it. The downward section of the trend can turn out to be almost any length, but it may already be completed.