The wave markup for the pound/dollar pair still looks complex because it does not look like a classic corrective or impulsive trend section. Since the current upward wave has exceeded the peak of the last wave b, the entire downward trend section, consisting of waves a-b-c, can be considered complete. Although it resembles the trend section for the same period in the euro currency, both pairs have built downward three-wave sets of waves. If this assumption is correct, the formation of a new upward trend section has begun for the pound. Since I can single out only one wave starting from March 8, forming a new trend section will take a long time. Both pairs should build similar wave formations. If this is indeed the case, then wave 2 or b for the pound may be extended, and at the same time, a downward three-wave set can be built for the euro currency. Thus, I expect a deep wave b, as in the case of the formation of the previous three-wave set. Consequently, a decline in the pair can be expected towards the 1.1850 level or slightly higher.

The pound shows strange movements.

The exchange rate of the pound/dollar pair on Wednesday decreased by just ten basis points. We observe quite ambiguous movements in the British currency for the second day in a row. For example, yesterday, demand for the pound increased due to the frankly negative statistics from the UK. When a weak inflation report was released, the pound rose again and fell. The market seems to not understand how to interpret the news background, so it gets nervous and panics. Let's figure out what the decline in inflation to 10.1% in March means for the pound, the Bank of England, and the British economy.

First of all, the decline in inflation in the UK is quite conditional. The consumer price index has dropped by only 1% over the past 4-5 months. Inflation in the European Union decreased by 1.6% in March alone. As they say, the difference is obvious. It should also be considered that the Bank of England's rate is higher than the ECB's rate, and the British regulator began tightening its monetary policy much earlier than the ECB. Thus, it can be said confidently that the Bank of England can do nothing about high inflation. Each new acceleration or weak decline will not lead to an additional rate hike after its 11 increases. This is important to understand. A rate hike puts additional pressure on the economy, which has been balancing on the verge of recession for the past few quarters even without it. British politicians and bankers happily announce that a recession can be avoided but prefer not to focus on inflation hardly falling after 11 increases in their speeches. With such initial data, demand for the pound cannot grow.

The wave pattern of the pound/dollar pair implies the formation of a new downward wave. The wave markup is now ambiguous, as is the news background. I do not see factors supporting the British currency in the long term, and wave b may be very deep. A decline in the pair is now more likely, as all the waves in recent times have been approximately the same size. Trading can now be done at the 1.2440 level, which corresponds to 0.0% on the Fibonacci scale. Below it - sell with targets 300-400 points lower; above it - cautiously buy.

The picture is similar to the euro/dollar pair on the older wave scale, but there are still some differences. At this time, the upward corrective section of the trend has been completed. But the three-wave downward section may have already been completed as well. And the new upward trend section may also be three-wave and horizontal.