FX.co ★ GBP/USD. Analysis for January 11th. Nothing will help the dollar

The wave analysis for the pound/dollar pair remains fairly clear while continuing to complicate simultaneously. The construction of a new bearish trend segment is ongoing, the first wave of which has taken on a fairly extensive form. The second wave has also become quite lengthy, giving us every reason to expect the long construction of the third wave.

At the moment, I don't know if the construction of wave 2 or b is complete. The pullback from the peaks reached is too small to consider it a guaranteed start of wave 3 or c. The rise in the pound's quotes against the backdrop of meetings of the Bank of England and the Federal Reserve has led to significant growth, and now wave 2 or b has taken on a five-wave form. However, it remains corrective and should be completed soon (or may already be completed). The targets for the pair's decline within wave 3 or c are located below the 1.2039 level, which corresponds to the low of wave 1 or a.

Unfortunately, wave analysis tends to become more complex, and the news background only sometimes corresponds to it. I am not giving up on the working scenario at the moment, but the danger of transforming the entire wave structure is present.

The pound will not fall below 1.2627.

The exchange rate of the pound/dollar pair showed a slight increase during the first half of Thursday, and in the second half, it sharply declined after the US inflation report for December was released. The market reaction was predictable because the Consumer Price Index accelerated more than expected. What does the acceleration of inflation in the US mean? It is still too early to talk about the Fed transitioning to a policy of easing. If this is true, then the current interest rate level may persist longer than until March or May. And the longer the rate remains at its peak, the more rigid the regulator's current sentiment can be considered. And a strict regulator's sentiment should support the US currency.

However, the market is currently ignoring all these conclusions. Despite the new acceleration of inflation, it does not see any reason to increase demand for the dollar. However, it should acknowledge its mistake in anticipating the first rate cut in March. The FOMC rate cannot be cut in March unless the February report shows a drop in inflation to 2.7-2.8%. And I doubt that this will happen. Based on this, today's information should have had a much stronger impact on increasing demand for the dollar. It may be too early to conclude, and they should be made tomorrow, but a 25-point decline is extremely small to talk about the transition to the construction of a bearish wave 3 or c.

General conclusions.

The wave pattern for the pound/dollar pair suggests a decline. At the moment, I am considering selling the pair with targets located below the 1.2039 level because wave 2 or b should ultimately be completed and may be completed at any moment. There are already some signs of its completion. However, I would take my time with conclusions and sales. I would wait for a successful attempt to break the 1.2627 level, after which it will be much easier to believe in further pair decline.

The picture is similar to the euro/dollar pair on the higher wave scale, but there are still some differences. The descending correctional trend segment continues its construction, and its second wave has already taken on an extensive form, reaching 61.8% of the first wave. An unsuccessful attempt to break this level may lead to the start of the construction of wave 3 or c.