What to expect from the pound?

In the last two reviews, we found that there will be very few important events in the United States and the European Union in the upcoming week. What about the United Kingdom, which gave us a whole bunch of important data last week? First of all, take note that the key inflation indicator exerted pressure on the British currency, but it didn't last very long. The market could not ignore inflation, which did not rise according to its expectations, and therefore, the Bank of England has no more reasons to keep the rate at the peak value. I consider this a crucial moment that is something to be considered. The market no longer has more reasons to buy the pound, and therefore, over time, demand for it may decrease.

It won't take much time to highlight the important events of the upcoming week. PMI data for February, and that's it. According to analysts, it is not worth expecting a strong rise or fall in business activity in February, so the market reaction will be restrained. And there will be no other important events. Of course, the U.S. will release a couple of reports, and several FOMC members will speak. However, I would assume that we are in for a very dull week.

But this may be a good thing for the GBP/USD instrument. Sellers, who now have support for the wave pattern, may be able to lower the instrument by 100-120 basis points without interference so they can hit the 1.2468 mark. And if the wave 3 or c from the downtrend is being formed, then the pound will fall further. However, unfortunately, the wave pattern for the pound allows for several different scenarios, each of which implies complications.

If in the situation with the EUR/USD instrument, I am about 60-70% confident in the wave markup and its goals, then there is much less certainty with the GBP/USD instrument. Both instruments usually trade very similarly, but in the last few weeks, the pound has been living its own life.

Based on the analysis, I conclude that a bearish wave pattern is being formed. Wave 2 or b appears to be complete, so in the near future, I expect an impulsive descending wave 3 or c to form with a significant decline in the instrument. The failed attempt to break through the 1.1125 level, which corresponds to the 23.6% Fibonacci, suggests that the market is prepared to sell a month ago. I am currently considering short positions with targets around the level of 1.0462, which corresponds to 127.2% according to Fibonacci.

The wave pattern for the GBP/USD pair suggests a decline. At this time, I am considering selling the instrument with targets below the 1.2039 mark because wave 2 or b will eventually end, just like the sideways trend. A successful attempt to break through the 1.2627 level acted as a sell signal. Another signal was formed, in the form of an unsuccessful attempt to break this level from below. Now I am quite confident about the instrument's decline, at least to the 1.2468 level, which would already be a significant achievement for the dollar, as the demand for it remains very low.Pentru mai multe detalii, va invitam sa vizitati stirea originala.