For the GBP/USD pair, the wave analysis remains fairly clear and, at the same time, complex. The construction of a new downtrend section continues, with the first wave taking on a quite elongated form. The second wave has also turned out to be quite extensive, giving us every reason to expect the prolonged development of the third wave.
At the moment, I am not entirely confident that the construction of wave 2 or b is complete. The retracement of quotes from the achieved peaks 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 appearance, 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 currently challenging to attribute to any specific higher-scale wave.
The targets for lowering the pair 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 be complicated and does not always correspond to the news background. At the moment, I do not abandon the working scenario; a successful attempt to break the 38.2% Fibonacci level indicates the market's readiness to sell the pound.
Business activity indices were perceived positively by the market.
The GBP/USD pair increased by 30 basis points on Friday, but the range of movements was very weak. The pound continues to toss back and forth within a horizontal channel between the 50.0% and 23.6% Fibonacci levels. There is no doubt that over the past three months, there have been enough reports and significant events that could have triggered the construction of an impulsive wave 3 or c. Or any other wave that could be considered trending. But the market cannot decide what to do with the British pound at the moment. Therefore, we have been observing a sideways movement for several months. And over time, nothing changes.
I think the last chance for the pound to build wave 3 or c lies in the Bank of England's softening stance on monetary policy. If BoE members start talking about the need to lower interest rates, it could trigger market activity. Otherwise, I do not know what could make the market reduce demand for the pound. If the pound's upward movement resumes, the entire wave analysis will take an unreadable form. Even the last few months in wave terms are entirely unreadable. How to trade a pair that constantly changes direction? It's very problematic to enter the market with a deal on those micro-waves we observe.
General Conclusions:
The wave pattern of the GBP/USD pair still suggests a decline. Currently, I am considering selling the pair with targets below the 1.2039 level because wave 2 or b cannot last forever, just like the sideways movement. A successful attempt to break the 1.2627 level signaled for sales. However, at the moment, I can also identify a new sideways movement with the lower boundary at the 1.2500 level. This level is currently the limit for me in the pound's decline. Wave 3 or c of the downtrend section still does not start.
On a larger wave scale, the picture is similar to the EUR/USD pair, but there are still some differences. The descending corrective part of the trend continues its construction, and its second wave has taken on an elongated form – at 61.8% of the first wave. An unsuccessful attempt to break this level may lead to the start of the construction of wave 3 or c.