The wave analysis for GBP/USD remains relatively straightforward. The upward trend wave 3 or C appears to be complete, and a new downward trend phase is likely underway, possibly in wave D. The probability of this, however, is approaching zero. No compelling reasons exist for the British pound to resume its upward movement. Nevertheless, the wave structure has become more complex, with wave 3 or C exhibiting a more extended pattern than anticipated by many analysts several months ago. The entire upward trend phase could still take on a five-wave structure if the market finds new reasons for long-term purchases. I do not currently see any such reasons.
The internal wave structure of the first wave of the new trend appears complex, making it challenging to identify five distinct waves. However, there was an unsuccessful attempt to breach the 1.2444 level, equivalent to 100.0% on the Fibonacci scale. This bounce may indicate the completion of wave 1 or A. If this assumption is correct, both pairs will likely begin constructing a corrective wave 2 or B later this week.
The British pound received no support from the news on Tuesday.
The GBP/USD exchange rate fell by 35 basis points on Tuesday, echoing the situation observed in the EUR/USD pair. Yesterday, I was ready to conclude that a corrective wave was beginning, but today, everything appears as if the pair is preparing for a breakthrough of the 100.0% Fibonacci level. If this breakthrough occurs, the decline in quotes will continue within the framework of the first wave.
Today's news background was more interesting than on Monday or Friday, if only because it existed. In the UK, unemployment rose by 0.1% in July, reaching 4.3%, while unemployment benefits fell by 207,000. Readers should be aware of the discrepancy in these figures since the decline in unemployment benefit claims occurred in June, not July. Unemployment data in the UK is published with a delay of several months, making it challenging to consider it essential and up-to-date. Meanwhile, wage growth, including bonuses, rose by 8.5%, and excluding bonuses, it increased by 7.8%. The market had expected lower values and high wage growth rates are still viewed negatively by the central bank and the government as they can fuel inflation. However, the Bank of England cannot do much about high wages. Even another interest rate hike will not stop the rising wages of British workers. Considering the current inflation rate, wage growth does not seem surprising.
General Conclusions:
The wave pattern for the GBP/USD pair suggests a decline within the descending trend. There is a risk of completing the current descending wave if it is wave D rather than wave 1. In this case, a new uptrend wave may begin from current levels or even higher, and buyers may hope for the construction of wave 2. An unsuccessful attempt to breach the 1.2444 level, corresponding to 100.0% on the Fibonacci scale, may indicate the market's readiness to build an uptrend wave.
The situation is similar to the EUR/USD pair, but on a larger wave, there are still some differences. The descending corrective part of the trend is complete, and a new uptrend may already be complete or take on a full five-wave structure.
