Regarding the GBP/USD pair, the wave analysis remains relatively simple and clear. The construction of the upward wave 3 or C is complete, and the theoretical development of a new downward trend segment has begun, which could still be wave D. Still, the probability of this is approaching zero. There are no grounds for the British pound to resume its ascent. However, wave labeling has transformed into a more complex one, and wave 3 or C has taken on a more extended form than many analysts expected a few months ago. The entire upward trend segment may still take on a five-wave structure if the market finds new reasons for long-term purchases. I do not see any such reasons at the moment.
The internal wave structure of the first wave of the new trend segment looks complex, and it is difficult to identify five waves within it. However, we saw five waves with the euro currency, while the British pound failed to break the 1.2444 level, equivalent to 100.0% according to Fibonacci. This rebound may indicate the completion of wave 1 or A construction. If this assumption is correct, both pairs will begin building corrective wave 2 or B this week.
The British pound is in a secondary role.
The GBP/USD exchange rate rose by 60 basis points on Monday, which is significant considering the absence of news background. This movement is an indirect sign of the beginning of the construction of corrective wave 2 or B. It should be relatively extensive, corresponding to the first wave. Therefore, its targets may be around 27-28 figures, and it will take several weeks to build if the wave has indeed started.
This week, there will be a meeting of the ECB, while the Bank of England and the Federal Reserve meetings will take place next week. The British pound will be in the shadow and passive, but it will move just like the Euro currency. It will not stand still. Remember that the market trades not only on days with news events. If a movement away from the lows in the framework of a corrective wave should start now, then there is no need for news background. The US inflation report poses a risk to this scenario because it is expected to accelerate again for the second consecutive month. Consumer Price Index growth could reach 3.6% YoY, which is very favorable for the US dollar, as the FOMC may raise the rate based on this report one or two more times, which is not yet factored into the prices. In this case, the dollar may strengthen and disrupt the second corrective wave. However, this is an unlikely scenario.
General Conclusions.
The wave picture of the GBP/USD pair implies a decline within the framework of a downward trend segment. Completing the current downward wave is risky if it is wave D rather than 1. In this case, the development of wave 5 could begin from the current levels. However, we are currently observing the construction of the first wave of the new segment. The maximum buyers can expect is wave 2 or B construction. The unsuccessful attempt to break the 1.2444 level, which corresponds to 100.0% according to Fibonacci, may indicate the market's readiness to build an upward wave.
The picture is similar to the EUR/USD pair on a larger wave scale, but there are still some differences. The downward corrective trend segment is complete, and the construction of a new upward one is ongoing, which may have already been completed or may take on a full five-wave structure.
