Regarding the GBP/USD pair, the wave analysis remains fairly clear while simultaneously becoming more complex. The construction of a new bearish trend segment continues, with the first wave having a considerable length. 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 entirely certain whether the construction of wave 2 or b is complete. The price retracement from the peaks reached is too small to consider it a guaranteed start of wave 3 or c. Wave 2 or b has already taken on a five-wave form, but it remains corrective and should be completed soon (or may have already been completed). Nevertheless, we continue to observe the formation of new and additional internal waves that are currently challenging to attribute to any specific higher-scale wave.
Targets for the pair's decline within the presumed wave 3 or c are located 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 does not always correspond. At present, I do not discard the working scenario, but several unsuccessful attempts to break the 38.2% Fibonacci level indicate the market's current lack of readiness for sales.
The British pound continues sideways trading
The GBP/USD pair increased by 50 basis points on Wednesday. Yesterday, we witnessed a sharp decline in demand for the British Pound, but today, it also rose sharply, with the pair surging once again. Yesterday, there were a few reasons for the market to sell the British pound as the news background was absent. However, not all market movements are based solely on news and data. We saw an unexpected decline in the pair that had no impact. Yesterday, the British pound began to recover its position, and it continues to do so today. The Business Activity Indices in the UK helped in this regard. After their release in the morning, the British Pound gained 56 points.
In the services sector, business activity for January increased from 46.2 points to 47.3, while in the manufacturing sector, it increased from 53.4 points to 53.8. The markets expected much lower values, so when these data became public, demand for the pound increased. Positive statistics from the UK once again hindered the market from constructing the presumed wave 3 or c. When writing this article, horizontal movement between the Fibonacci levels of 38.2% and 23.6% is maintained, which means that neither my readers nor I can expect the formation of an upward or downward wave soon. Today, the British pound rose; tomorrow, it could just as easily start a new decline towards the 1.2627 level.
General Conclusions:
The wave pattern of the GBP/USD pair suggests a decline. I am considering selling the pair with targets below the 1.2039 level because wave 2 or b should ultimately be complete and could do so at any moment. However, since the movement has been horizontal for a month, I recommend against rushing into sales. Since there has been an unsuccessful attempt to break the 1.2627 level, it would be much easier to believe in further pair decline after a successful breakout.
The picture resembles the EUR/USD pair on a larger wave scale, but there are still some differences. The descending correctional trend segment continues to develop, and its second wave has taken on an extended form – reaching 61.8% of the first wave. An unsuccessful attempt to break this level could lead to the start of wave 3 or c construction.