FX.co ★ GBP/USD analysis on October 22. There may be only three candidates for the post of Prime Minister of Great Britain.

For the pound/dollar instrument, the wave marking looks quite complicated at the moment but still does not require any clarification. We have a supposedly completed downward trend segment consisting of five waves a-b-c-d-e. If this is indeed the case, then the construction of a new upward trend section has begun. Its first and second waves are presumably completed. Unfortunately, there is no confidence in this particular scenario since the instrument must go beyond the peak of the last wave to show us its readiness to build an upward section of the trend and not complicate the downward one once again. The peak of the nearest wave d is located at about 23 figures. Thus, even after the pound has increased by 1000 points, you need to go up another 1000 points to reach this peak.

Nevertheless, an unsuccessful attempt to break through the 200.0% Fibonacci level indicates that the market is ready to buy the pound. So far, the wave marking for the British looks more or less convincing, but it can easily transform into a downward one, especially if the news background deteriorates again.

The elections start on Monday.

The exchange rate of the pound/dollar instrument increased by 60 basis points on October 21. But now the market is watching the next prime minister's election in the UK with trepidation. They like to change prime ministers in this country. There are even jokes about Liz Truss that she is one of the few premiers who has worked under two monarchs at once. Seriously, new elections will begin on Monday. To get the status of a nominee for the post, you need to enlist the support of at least 100 conservative parliamentarians. Since the Conservatives have only 357 seats in Parliament, the maximum number of candidates is 3. Moreover, if only two candidates get at least 100 votes, then only those two will fight for the prime minister's seat.

It is not difficult to guess who will take these potential two or three places, which will eventually fight for victory. Rishi Sunak and Penny Mordaunt dropped out of the last vote in the last and penultimate rounds, as well as Boris Johnson. He unexpectedly, for many, decided to return and run again. Thus, one of these three will become the new prime minister with a 99% probability. In my opinion, the real fight will be between Johnson and Sunak. The fact that Johnson has already led the country speaks in favor of Johnson. In favor of Sunak – that he is a financier, and now the country needs a person who would be able to stabilize the economy. However, Sunak lost the last election to Liz Truss and may lose this time. Boris Johnson is a more famous figure in British society, which is very important in the run-up to the parliamentary elections. In any case, we are waiting for an interesting next week, by the end of which the name of the new prime minister should be known.

General conclusions.

The wave pattern of the pound/dollar instrument implies the construction of a new upward trend segment. Thus, now I advise buying the instrument on the MACD reversals "up" with targets near the estimated mark of 1,1705, which equates to 161.8% Fibonacci. Buyers, as well as sellers, should be careful since the downward section of the trend may become more complicated once again.

The picture is similar to the Euro/Dollar instrument at the larger wave scale. The same ascending wave does not fit the current wave pattern, the same five waves down after it. The downward section of the trend can turn out to be almost any length, but it may already be completed.