FX.co ★ Wave analysis of GBP/USD for June 23. Will the Bank of England support the demand for pound?

The wave counting for the Pound/Dollar instrument has cleared up due to the last drop in quotes. Now we can say with more confidence that the supposed wave e has completed its construction. Consequently, the entire upward part of the a - b - c - d - e trend has ended. If this is indeed the case, then the construction of a new downward section has begun, which may turn out to be three-wave. At the moment, the construction of its first wave a is presumably completed. If this assumption is correct, then the instrument is now within the framework of constructing an upward wave b, which can complete its construction around the 40th or 41st figures. The whole wave picture looks like an alternation of not only corrective waves (impulse waves are absent now), but also as an alternation of corrective trend sections. The best thing to do now is not to try to make sense of the internal waves, as the structures of the older waves are extremely complex. It is better to try to work with waves of a higher scale, which now practically do not raise any questions.

The Pound/Dollar instrument traded quite actively on Wednesday and gained about 50 basis points. Thus, the recovery continues after the decline in quotes last Wednesday and Thursday. This morning the indices of business activity in the services and manufacturing sectors in the UK were released, and both were worse than the May values. Thus, the demand for the British pound did not increase in the first half of the day, but the instrument continued to build wave b anyway. In America, data on the business activity was also released today. The service sector was followed by an unexpected decline from 70.4 points to 64.8 points, and in the manufacturing sector - an increase from 62.1 to 62.6 points. Thus, in the second half of the day, the pound has already received the support of the news background. However, all of these reports have very little significance ahead of tomorrow morning's Bank of England meeting summary.

Let me remind you that the markets are now waiting for hints from the Fed and the Bank of England on the timing of the completion of the stimulus program. But if the Fed, one might say, dispelled these dreams of the markets at the last meeting (since it only announced that it was going to start discussing this issue), then concrete actions are expected from the Bank of England right now. This does not mean that the British central bank will be announcing the tapering of the QE program tomorrow with 100% probability. Yet such a possibility exists. If this happens, then the demand for the British currency may increase significantly, and wave b will turn out to be longer than currently assumed. However, I think that the Bank of England will still postpone making important decisions and will watch the economic recovery and inflation for some time.

At this time, the wave pattern has cleared up a bit. However, the supposed wave a is completed. If this is the case, then the construction of the assumed wave b has begun, the targets of which are located 100-150 points above the current levels. Thus, I recommend now to buy the instrument for each signal of the MACD indicator "up". So far, wave b does not look complete.

The upward trend, which began its construction a couple of months ago, has taken on a rather ambiguous form and has already been completed. However, the wave counting still looks rather complicated, as there is no impulse movement now. Presumably, the construction of a new three-wave downward trend has begun. Thus, we can expect a decline in quotes in the future to the lows of waves c and b.