The wave analysis for the GBP/USD pair remains relatively clear and, at the same time, remains complex. The construction of a new downtrend segment continues, the first wave of which has taken on a quite prolonged form. The second wave has also become quite extensive, giving us every reason to expect a prolonged construction of the third wave.
At the moment, I am not entirely confident that the construction of wave 2 or b is complete. The retreat 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 form, but it remains corrective and should be completed soon (or may already be completed). Nevertheless, we continue to observe the construction of new and new internal waves, which are currently very difficult to attribute to any specific wave of a larger scale.
Targets for the decline of the pair within the presumed wave 3 or c are located below the mark of 1.2039, corresponding to the low of wave 1 or a. Unfortunately, wave analysis tends to become more complex and does not correspond to the news background. At the moment, I do not abandon the working scenario, and the descending corridor indicates a slight, but still a decrease, in demand for the pound.
The decline of the pound is too slow.
The GBP/USD pair increased by 10–15 basis points on Friday. Certainly, such a course change is unlikely to indicate active market actions and affect the wave pattern. Practically on any chart, we now see the same thing - movements in very limited corridors and areas. The descending corridor still maintains prospects for a decline in the British pound, but any movements are so weak that there is no confidence in this.
Today in the UK, the only report of the week was released, which had no chance of influencing market sentiment. The business activity index in the manufacturing sector in February was 47.5, weaker than market expectations. However, this increase helped the Briton gain 10 points, no more.
A little later, in the USA, the ISM Manufacturing Business Activity Index and the University of Michigan Consumer Sentiment Index will be released. I hope that at least by the end of the week, we will see some movement. The market usually trades a bit more actively during the American sessions. Consumer sentiment and ISM reports can be considered important. However, I do not think that these two reports can greatly help the dollar or the pound at the end of the week, as the market has been resting more than trading lately.
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 located below the mark of 1.2039, as I believe that wave 3 or c will sooner or later gain momentum. A successful attempt to break the 1.2627 mark signaled sales; however, at the moment, I can also highlight a new sideways trend with the lower boundary at the 1.2500 mark. This mark is currently the limit for me in the decline of the Briton. I can also highlight a descending corridor, which also indicates the preferred decline in quotes.
On the larger wave scale, the picture is similar to the EUR/USD pair, but there are still some differences. The descending correctional segment of the trend continues its construction, and its second wave has taken on an extended form - at 61.8% of the first wave. An unsuccessful attempt to break this mark may lead to the start of the construction of wave 3 or c.