The wave analysis for the pound/dollar pair remains quite simple and understandable. The construction of a new descending trend segment, its first wave, continues and takes a long time. In my opinion, the British pound has no grounds to resume its ascent, so I don't even consider the scenario of a new ascending segment. The first wave of the descending trend segment has already taken on a very extended form, but demand for the pound remains low. I would like to remind you that there are no specific target sizes for waves. The first wave can continue to form for an indefinite period without any restrictions.
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, five waves are visible in the euro currency. If the construction of the downward wave set is completed for the euro, there is an 80% probability that it will also be completed for the pound. At the moment, the pair has made an unsuccessful attempt to break the level of 1.2120, which corresponds to 76.4%, according to Fibonacci. The subsequent pullback from the reached lows may indicate a transition to the construction of a corrective wave.
No help from the news background yet.
The exchange rate of the pound/dollar pair decreased by 60 basis points on Monday. The decline of the pound began on Friday, when fairly mediocre statistics were released in the United States. I believe that the decline in the pair in the second half of Friday was not entirely logical. However, assuming that the construction of the first downward wave of the new trend is not complete, the decline in pound quotes is quite reasonable. We saw a rebound from the reached lows by 150 points, and now the decline can continue.
This morning, the news background was again almost neutral. In the UK, the Business Activity Index in the manufacturing sector increased to 44.3 points in September but still remains well below the key mark of 50.0. At the same time, the business activity index in the manufacturing sector of the United States increased to 49.8. Moreover, the more important ISM index in the manufacturing sector increased to 49. Based on these figures, it becomes clear that manufacturing activity in the United States is in a much better state than in the UK, which could have caused a new increase in demand for the dollar. However, the increase in demand for the dollar began in the morning, and the British index was unlikely to cause such a sharp decline in the pound.
I believe that the market has not yet saturated itself with pair sales and has not completed the construction of the first wave (although we have not yet seen a successful attempt to close below 1.2120). I would recommend cautiously basing decisions on the level of 1.2120. Until a successful attempt to close below it occurs, the first wave, whether it's 1 or A, can be considered completed.
General Conclusions:
The wave pattern for the pound/dollar pair suggests a decline within a new descending trend segment. The maximum the pound can expect in the near future is the construction of wave 2 or B. However, as we can see, even with a corrective wave, there are currently significant difficulties. At this time, I would advise caution with selling, as an unsuccessful attempt to break the level of 1.2120 suggests the possibility of a transition to the construction of a correction wave. I do not recommend buying within the correction.
On a larger wave scale, the picture resembles the euro/dollar pair, but there are still some differences. The descending correction trend segment continues its construction, and its first wave has already taken on an extended form and is definitely not related to the previous ascending segment.
