The wave analysis for the pound/dollar pair remains relatively simple and clear. The construction of ascending wave 3 or C has been completed, and the building of a presumably new downtrend section has started, which theoretically could be wave D. Still, the probability of that is approaching zero. I believe there are no grounds for the pound to resume its rise, so I do not consider this scenario. The entire upward trend section could still take on a five-wave structure if the market finds new substantial reasons for long-term purchases. I do not see any such reasons at the moment.
The internal wave structure of the first wave of the new trend section looks complex, and it is difficult to identify five waves within it. However, five waves are visible on the euro currency, and an unsuccessful attempt to break the 1.0636 level has been made, equivalent to 100.0% on the Fibonacci scale. If the downward trend wave structure on the euro is completed, there is an 80% probability that it will also be completed for the pound.
On Tuesday, the pound/dollar pair's exchange rate increased by 20 basis points. There were no changes in the pound's value on Monday, and on Friday, there was a minimal decrease (also by 20 points). The pair have been in the same place for three days, so I cannot draw any new conclusions about its prospects or wave pattern. Moreover, what conclusions can one draw right now when the results of the Federal Reserve meeting will be known tomorrow evening and the results of the Bank of England meeting will be known the day after tomorrow? The demand for the British pound continues to decline ahead of these two events, which doesn't indicate anything.
Let's assume that the Bank of England raises interest rates by another 25 basis points. In that case, it would be more reasonable for the market to increase demand for the pound, as this decision is already known in advance. At the same time, the Federal Reserve's interest rate is likely to remain unchanged, so there is no reason to increase demand for the US dollar. In general, the results of both meetings will not significantly impact market sentiment or the movements of both pairs. The construction of the first wave is taking longer, and now is a good time to build a corrective wave. Without unexpected information from regulators on Wednesday and Thursday, we will not see any sharp and global reversals. The market will panic a bit, and that's about it. Tomorrow, with the inflation report in the UK, we can make some initial forecasts regarding the central bank meetings. Or rather, it depends on how the market reacts to these meetings.
The wave pattern of the pound/dollar pair suggests a decline within a new downtrend section. There is a risk that the current downtrend wave may be completing if it is wave D, but we are currently witnessing the construction of the first wave of the downtrend. The maximum that the pound can expect soon is the construction of wave 2 or B. A successful attempt to break the 1.2444 level, which corresponds to 100.0% on the Fibonacci scale, indicates the market's readiness for further decline. Therefore, I still recommend staying in sales with targets around 1.2311, corresponding to 61.8% on the Fibonacci scale.
The picture is similar to the euro/dollar pair on the higher wave scale, but there are still some differences. The descending corrective section of the trend is completed, and the construction of a new ascending section continues, which may already be completed or take on a full five-wave structure.