The wave analysis for the GBP/USD remains relatively simple and clear. The construction of the upward wave 3 or c is complete, and the creation of a presumable new downward trend segment has begun, which could be the fourth wave. The pound has no reason to resume rising (and many reports and events support my opinion). However, the wave marking has transformed into a more complex one, and wave 3 or c took on a more extended form than many analysts expected a few months ago. The entire upward trend segment might take a five-wave shape if the market finds new reasons for long-term purchases.
In any case, I expect the continuation of the downward wave construction, which began almost precisely on schedule. If the current wave gets a five-wave inner structure, it can be considered the first impulse and anticipate the further decline of the pound (after the construction of the corrective wave 2 or b). However, today there was a second unsuccessful attempt to breach the 127.2% Fibonacci level, and the recent price drop might be both the fifth wave and a correction within the ascending wave of a larger scale.
The GBP/USD rate on Monday decreased by just ten basis points. We saw both declines and rises throughout the day, despite no news background in the UK and the US. Therefore, one might assume that other types of signals are more critical. I want to emphasize the unsuccessful attempt to breach the 1.2620 mark, as it's the second time. This implies that we might see some price increase soon.
Tomorrow in the UK, three reports will be released that deserve attention. The unemployment rate is unlikely to change for June, but wages in June could increase by 7.3% and 7.4%, respectively (with and without bonuses). These growth rates will be higher than the previous month, and the Bank of England, let me remind you, blames the rapid wage growth for driving inflation. In other words, according to the regulator, wages should grow much slower; then inflation will start to decrease faster, and the need to raise the rate will lessen, which is good for the economy. Based solely on this report, the pound might rise tomorrow.
However, there will be a third report – on unemployment benefit claims. Their number in May could be 50,000, but typically, actual figures deviate significantly from market expectations. And this report is a real "dark horse" that can move the pair in any direction with almost any force.
The wave pattern of the GBP/USD pair suggests a decline. As I advised, my readers could have opened sell positions several weeks ago. The target was the 1.2620 mark, and it has been successfully reached. There's a risk of the current downward wave ending if it is wave d. In this case, the construction of wave 5 might begin from the current levels. This isn't the most likely scenario, but there might still be wave construction and a corrective wave. A successful breach of 1.2616 (or an unsuccessful one at 1.2840) will indicate the market's readiness to continue the construction of the downward wave that began on July 14th. This is precisely the scenario I am betting on.
On a larger wave scale, the pattern is similar to the EUR/USD pair, but some differences remain. The downward corrective segment of the trend is complete, and the construction of a new upward segment is ongoing, which might already be finished or take on a full five-wave form.