FX.co ★ GBP/USD analysis 21/10/2020: America prepares for Biden and Trump's final debate

The construction of a new downward trend section is expected to continue. However, confidence that it will end in a-b-c waves increases daily. If this is true, then the price increase will continue from the current levels with targets located near the peak of the z wave. A successful attempt to break through the maximum of wave b also indirectly indicates the readiness of the markets for new purchases of the instrument. However, as with the EUR/USD instrument, the internal wave structure of the upward wave that starts on September 23 looks very unusual and complex.

A closer look shows that the wave marking of the section between September 1 and 23 took a three-wave form that looks quite convincing. An unsuccessful attempt to break through the 61.8% Fibonacci level assures that the descending set of waves is complete. Three unsuccessful attempts to break the 50.0% Fibonacci level also speak in favor of resuming the increase in quotations. Thus, above the 50.0% Fibonacci level, the probability of building a new upward wave remains.

There is still very little positive news for the Pound. Though it is in moderate demand in the markets, it is rising with immense difficulty. The current wave layout allows for several scenarios at once, each involving a complication of the current wave structure. Thus, the first thing I can say is that the Pound will be under pressure from the market almost any day and resume falling within a new downward section of the trend. This development will be solely based on the news background. Second, America continues to prepare for elections and no one knows how they will affect all the instruments in which the Dollar is available. For example, the final round of TV debates between Donald Trump and Joe Biden will take place tomorrow. The first round was absolutely chaotic. Experts later said that voters who have not yet decided on their vote, wanted to hear the programs of both candidates on governance and development of the country for the next 4 years but instead witnessed a petty argument. Thus, the rules of the new round of TV debates were slightly changed to allow each candidate to speak calmly on each of the six issues.

In the UK, an inflation report has already been released today, which did not interest the markets in the least. Inflation rose to 0.5% YoY and 0.4% MOM. However, these figures are very difficult to call strong or optimistic. Nevertheless, in the morning, the Pound is again in demand. No other economic statistics are planned for today.

General conclusions and recommendations:

The Pound-Dollar instrument has presumably completed the construction of a downtrend section. A successful attempt to break through the 38.2% level allows us to recommend buying a tool with targets located near the 1.3191 and 1.3480 marks (which corresponds to 23.6% and 0.0% Fibonacci) for each new MACD signal "up". However, the current news background for the tool is such that at any time it can lead to a strong complication of the current wave markup. While the instrument's quotes are held above the level of 50.0%, the option of building an upward wave remains the main one.