The wave analysis for the GBP/USD pair remains quite clear and, at the same time, remains complex. The construction of a new downward trend segment continues, the first wave of which has taken extensive 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 confident that the construction of wave 2 or b is complete. The retreat 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 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 currently very difficult to attribute to any higher-scale wave.
Targets for the pair's decline within the presumed wave 3 or c are below the level of 1.2039, corresponding to the low of wave 1 or a. Unfortunately, wave analysis tends to be complicated and does not correspond to the news background. At the moment, I do not abandon the working scenario; a successful attempt to break through the 38.2% Fibonacci level indicates the market's readiness to sell the British pound.
The market sees no reason to sell
The GBP/USD pair increased by several tens of basis points on Monday. The movement has a slight downward slope, but it is so small that I still cannot conclude the start of wave 3 or c construction. I do not expect a strong rise from the British pound, but it becomes increasingly difficult every day to believe in its further decline. We see that the demand for the pound sterling is staying the same. And if it does not decrease, the British pound will not depreciate.
This week in the UK and the US, the news background will be relatively weak, so I do not expect a strong increase in the GBP/USD pair, which contradicts the current wave analysis. However, the wave analysis now helps us only on a global level. We see that an impulsive downward wave should be built, but it "should have" happened three months ago. Waves smaller in scale do not allow for the formation of a complete wave pattern that can be worked with. Wave analysis should be such that it can be used to make a profit, not just look good. Therefore, I see no point in highlighting micro-waves just to put them on the chart. Horizontal movement persists, and this is crucial.
General Conclusions:
The wave pattern of the GBP/USD pair still suggests a decline. At the moment, I am considering selling the pair with targets below the level of 1.2039 because wave 2 or b cannot last forever, just like the sideways movement. A successful attempt to break through the level of 1.2627 became a signal for sales. However, at the moment, I can also identify a new sideways movement with the lower boundary at the level of 1.2500. This level is currently the limit for me in the decline of the British pound. Wave 3 or c of the downward trend segment still needs to begin.
The picture is similar to the EUR/USD pair on a larger wave scale, but there are still some differences. The downward corrective trend segment continues its construction, and its second wave has taken an extensive form – at 61.8% from the first wave. An unsuccessful attempt to break this level may lead to the start of the construction of wave 3 or c.