FX.co ★ Analysis of GBP/USD on September 13. The British pound follows the euro, but does it extremely uncertainly

For the pound/dollar instrument, the wave marking looks quite complicated at the moment but still does not require any clarification. The upward wave, built between May 13 and May 27, does not fit into the overall wave picture, but it can still be considered corrective as part of the downward trend section. Thus, it can now be concluded that the downward section of the trend continues its construction. At the moment, we have completed waves a, b, c, and d, so we can assume that the instrument is inside wave e. Inside this wave, internal waves are being viewed, and I can assume that wave 4 in e is being built now. If this is indeed the case, then the decline in quotes will resume within the framework of wave 5 in e. However, in this case, the wave markings of the euro and the pound will cease to be similar to each other because, with a high degree of probability, the construction of a downward trend section for the euro has been completed. I suggest focusing on the next moment. Wave 4 should not be too strong. An unsuccessful attempt to break through the 161.8% Fibonacci level will mean that this is exactly the correction wave inside e. In this case, we should expect another downward wave in the current trend area.

The Bank of England is not going to rush to raise the rate

The exchange rate of the pound/dollar instrument increased by 60 basis points on September 13. In the morning, several reports were released in the UK. Now we will consider them. The unemployment rate decreased from 3.8% to 3.6%, the number of applications for unemployment benefits amounted to 40,000 with higher market expectations, and wages increased by 5.5% with lower expectations. Thus, the growth in demand for British goods in the first half of the day, from my point of view, is fair. I also believe there is no reason to expect a British and a European to move in different directions now. This can only mean that the construction of the downward trend section for the British is also completed. Or that the descending sections of both instruments will become very complicated.

The news background can greatly affect the market mood since the Fed, and the Bank of England will hold meetings next week. Most analysts expect a 50 basis point rate hike from the Bank of England. With the current rate of inflation and forecasts of a peak, I would say that the British regulator better hurry up. However, the Bank of England has never been known for its abrupt gestures. Most likely, the rate will continue to rise by 25-50 points until inflation starts moving back to 2%. And this path can take a very long time. The Bank of England has raised its inflation forecast to 13.3%, and how long will it take to lower it from 13% to 2%? How will the market react to the Bank of England's "weak" rate hike next week? Will he consider this a reason for new sales of the instrument?

General conclusions

The wave pattern of the pound/dollar instrument suggests a continued decline in demand for the pound. I advise now selling the instrument with targets near the estimated mark of 1.1112, equivalent to 200.0% Fibonacci, for each MACD signal "down," but this mark is quite far away, so the instrument may not reach it. Inside the fifth wave, it is necessary to sell more cautiously since the downward section of the trend can end at any moment. A successful attempt to break through the 1.1708 mark will cancel the sales option.

The picture is similar to the euro/dollar instrument at the higher wave scale. The same ascending wave that does not fit the current wave pattern, the same five waves down after it. Thus, one thing is unambiguous – the downward section of the trend continues its construction and can turn out to be almost any length.