The wave analysis for the pound/dollar pair remains quite understandable and, at the same time, continues to be complicated. The construction of a new downtrend segment of the trend continues, the first wave of which has taken on a very extended form. The second wave has also been extensive, giving us every reason to expect a prolonged construction of the third wave.
At the moment, I am not confident that the construction of wave 2 or b is complete. The pullback 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 already be completed). Nevertheless, we continue to observe the construction of new internal waves, which are now very difficult to attribute to any specific wave of a higher scale.
Targets for lowering the pair within the presumed wave 3 or c are located below the level of 1.2039, which corresponds to the low of wave 1 or a. Unfortunately, wave analysis tends to be complicated, and the news background only sometimes corresponds to it. I am not abandoning the working scenario at the moment, but a few unsuccessful attempts to break the 38.2% Fibonacci level indicate the market's unwillingness to sell right now.
The pound continues horizontal trading.
The pound/dollar pair decreased by a symbolic five basis points on Monday, and the amplitude of the pair was very weak. The news background was absent today, so the market rightly took another day off. The first reports of the week will be released in the European Union and the United States tomorrow, so on Tuesday, we can expect more interesting movements.
However, on individual days, we can observe very interesting movements, but what's the difference if the GBP/USD pair has been trading horizontally for six weeks already? On Tuesday, Wednesday, or Thursday, we can see the British rise by 100 basis points, and what will it change? The rate will remain between the Fibonacci levels of 23.6% and 38.2%. In my opinion, this week, not only reports and events themselves should force the market to wake up, but all events together should support only one of the currencies of this pair. Otherwise, we will see another "roller coaster," and horizontal movement will persist.
Certainly, a lot can be expected from the Fed and Bank of England meetings. We see that the rhetoric of ECB members is changing towards more "dovish," the same can be expected from Bank of England members. If this does not help the Briton break out of the sideways movement, it remains to wait for it to happen without any connection to the news background.
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 level of 1.2039 because wave 2 or b should eventually be completed and may be completed at any moment. However, as we observe only horizontal movement, I recommend staying within sales for now. I would wait for a successful attempt to break the level of 1.2627, after which it will become much easier to believe in the pair's further decline.
The picture is similar to the euro/dollar pair on a larger wave scale, but there are still some differences. The descending corrective segment of the trend continues its construction, and its second wave has 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 the construction of 3 or c.