For the pound/dollar instrument, the wave marking looks quite complicated at the moment but still does not require any clarification. The upward wave, which was 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. 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 the last increase in quotes is wave 4 in e. If this is true, then the decline in quotations has already resumed within the framework of wave 5 in e. The wave markings of the euro and the pound in the latter wave do not coincide. There's nothing to worry about, but we've already gotten used to the fact that both instruments move in almost the same way. An unsuccessful attempt to break through the 161.8% Fibonacci level indicated the readiness of the instrument for a new downward wave, which may be the last in the composition of e.
A new rate hike could save the pound
The exchange rate of the pound/dollar instrument decreased by another 40 basis points on September 19. The pound has been falling almost every day, and I cannot help but associate this movement with the planned events this week. From my point of view, the market did not wait for the results of the Fed and Bank of England meetings and began to win them back. I can't explain the new fall of the pound in any other way. But at the same time, wave e took a five-wave form a week earlier and may be nearing completion. And wave 5 on the euro currency may already be completed. Thus, playing back the results of the Bank of England and the Fed meetings a little earlier than the events themselves may even be useful. I do not rule out that this week the euro and the pound will begin to move away from the achieved lows, which can be considered the beginning of building new upward trend sections, so far corrective.
The market is waiting for an increase of 50 basis points, but the demand for British is still falling. In general, I could say that the euro and the pound are quite capable of declining for several more months, but the wave markings indicate that the decline should end this week. As a result of this week's events, downward trends will become more complicated (which implies a decline for another month or two), or they will end. Of course, everything looks quite simple in words, but everything can be much more complicated in practice. But I try to draw the most obvious conclusions because it would be impossible to work with tools without them. There will be practically no other news this week.
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.
The picture is very similar to the euro/dollar instrument on the higher wave scale. The same ascending wave does not fit the current wave pattern, the same five waves down after it. Thus, one thing is unambiguous – the downward trend section continues its construction and can turn out to be almost any length.
