The wave analysis for the pound/dollar pair remains relatively clear while continuing to become more complex at the same time. The construction of a new downtrend section is ongoing, the first wave of which has taken on an extended form. The second wave has also become lengthy, giving us every reason to expect a prolonged development of the third wave.
At the moment, I am not confident that the construction of wave 2 or b is complete. The price retreat from the peaks is too small to consider it a guaranteed start of wave 3 or c. The increase in the British pound's quotes amid the Bank of England and Federal Reserve meetings led to significant growth, and now wave 2 or b has taken on a five-wave form. However, it remains corrective and should be completed soon (or may have already been completed). The 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 only sometimes corresponds to it. At this time, I am not abandoning the working scenario. Still, a few unsuccessful attempts to break the 38.2% Fibonacci level indicate the possibility of a new complication in wave 2 or b.
The British pound will fall once it overcomes 1.2627.
The exchange rate of the pound/dollar pair decreased by 60 basis points on Tuesday and made another unsuccessful attempt to break through the 1.2627 level. Therefore, I still cannot conclude that wave 2 or b has completed its construction. The market continues to show that it is still being prepared to reduce demand for the British pound, even if there are all the necessary reasons.
Today, data on unemployment and wages were released in the UK, which rightfully caused a decrease in demand for the pound. At least, that's what can be said at first glance. However, upon closer inspection, it becomes clear that the decline in the British pound occurred before the release of British statistics, not after. The British currency is rising again at the start of the American session. Since the release of British statistics, the British pound has been rising more than falling.
And British statistics (as well as the current wave analysis) imply a decline in the British pound. If the unemployment rate in the UK did not change in November, then wages, including bonuses, fell to 6.5%. The market is expected to see a wage decline of only 6.8%. A more significant decline means that the Consumer Price Index may slow down, and a higher-than-expected report on unemployment benefit claims adds more reasons for the British pound to fall. However, as we can see, the British pound did not decline for long, and the time of its decline does not coincide with the release of British statistics.
General Conclusions.
The wave pattern of the pound/dollar pair suggests a decline. At the moment, I am considering selling the pair with targets located below the 1.2039 level because wave 2 or b must ultimately be complete and may end at any moment. There are already some signs of its completion. However, I do not recommend rushing to conclusions and sales. I would wait for a successful attempt to break through the 1.2627 level, after which it will be much easier to believe in further pair decline.
The picture is similar to the euro/dollar pair on a larger wave scale, but there are still some differences. The descending corrective trend section continues to be constructed, and its second wave has already taken on an extended form – to 61.8% of the first wave. An unsuccessful attempt to break this level may lead to the start of wave 3 or c.