Regarding the pound/dollar pair, the wave labeling remains reasonably clear while simultaneously becoming more complex. The construction of a new downtrend section of the trend continues, the first wave of which has taken on a rather prolonged form. The second wave has also become quite extensive, giving us every reason to expect the lengthy development of the third wave.
At the moment, I am not confident that the construction of wave 2 or b is complete. The retracement of quotes from the peaks achieved is too small to consider it a guaranteed start of wave 3 or c. The rise in the British pound quotes against the backdrop of the Bank of England and Fed meetings led to a significant increase, and now wave 2 or b has taken on a five-wave appearance. However, it remains corrective and should be completed shortly. Targets for the pair's decline within wave 3 or c are below the 1.2039 level, corresponding to the low of wave 1 or a.
Unfortunately, wave analysis tends to become more complex, and the news background needs to pay more attention to the wave pattern and try to correspond to it. I am not abandoning the working scenario now, but the danger of transforming the entire wave structure is present.
The market refuses to buy the dollar.
The pound/dollar exchange rate rose by 100 basis points on Tuesday. This is exactly the distance upward that the pair covered last Wednesday and Thursday when the results of the Bank of England and Fed meetings were announced. At that time, there were specific and logical reasons for increasing demand for the pound. The news background in those days was very strong, so passing 200 points in 2 days is not surprising. And what about today? There were no important news in the UK. In the European Union, an inflation report was released, which did not interest euro traders. In the United States, reports on the construction segment were released just an hour ago, and by that time, the pound had already gained a whole cent in price.
Based on the above, the current increase in pound quotes is not amenable to analysis. We may see a corrective pullback before a more significant decline, which should begin wave 3 or c with targets below the 1.20 figure. However, the more the pound grows, the more doubts arise about this scenario.
The number of building permits in the US for November was 1.46 million, slightly below market expectations. At the same time, the number of housing starts was 1.56 million, and forecasts were much lower. Against the backdrop of the pair's growth in the first half of the day, these statistics should have led to a decline in the second half, but so far, the market refuses to buy the US currency.
General conclusions.
The wave pattern of the pound/dollar pair suggests a decline within the descending wave 3 or c. At this time, I recommend selling the pair with targets below the 1.2039 level because wave 2 or b must ultimately be completed and may end at any time. The longer it turns out, the stronger the subsequent pound decline will be. The peak of the presumed wave e in 2 or b can be used for sales, and the order limiting possible transaction losses can be placed above it.
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 continues its construction, and its second wave has already taken on an extended form—61.8% of the first wave. An unsuccessful attempt to break through this level may lead to the beginning of the construction of 3 or c.