The wave analysis for the pound/dollar pair remains quite simple and clear. The construction of a new downtrend is continuing, the first wave of which has taken a very prolonged form. There is no reason for the pound to resume the upward trend, so I do not even consider such a scenario. The presumed wave 1 or a is completed. For the euro, wave 2 or b already has a five-wave structure, while it has taken a three-wave form for the pound. Thus, for both pairs, wave analysis now allows for the resumption of the decline. This is the moment I have been waiting for. The wave 2 or b structure should have taken a minimum of a three-wave form for the pound.
The wave picture currently looks good and convincing. If not for the US inflation report, we would have seen a continuation of the pair's decline and would have been even more convinced of the transition to wave 3 or c construction. However, now wave 2 or b may take a more complex form. US statistics this month have been very disappointing, causing the construction of the correction wave to drag on.
There were almost no reactions to inflation, as yesterday.
The pound/dollar pair rate decreased by 25 basis points on Wednesday. A day earlier, the pair rose by 220 points. Yesterday, the US released an inflation report that did not meet market expectations by 0.1%. Today, the UK released an inflation report that did not meet expectations by 0.2%. The question arises: in which of these cases should there have been a stronger reaction? The answer is obvious. US inflation is more significant for the market. At least because there are many more dollars in the world than pounds, and the US economy is the strongest in the world, unlike the British one. However, today's market ignored the report, showing its lack of interest in reports not from the US.
Base inflation in Britain fell by only 0.4% year-on-year and practically matched forecasts. Just like yesterday in the United States. But market participants found nothing interesting in this information either. The pound did not fall because now the Bank of England has much less reason to raise interest rates, and Andrew Bailey was right when he said he expects inflation to fall to 5% by New Year's. But all this information also did not affect the market sentiment. Now, the pair may not move in a way that does not correspond to the news background and wave analysis. Unfortunately, this can also happen. But for now, the analysis is intact and convincing, so I still expect a decline in the pound.
General conclusions.
The wave picture of the pound/dollar pair suggests a decline within the downtrend. The maximum the pound can expect is a correction. At this time, I recommend selling the pair with targets below the level of 1.2068 because wave 2 or b will eventually be completed. And it would have been completed if not for a series of disappointing reports from the United States. Initially, sales should be insignificant because there is always a risk of complicating the existing wave.
The picture is similar to the euro/dollar pair on a larger wave scale, but there are still some differences. The descending corrective trend continues to build, and its first wave has already taken a prolonged form and is unrelated to the previous upward trend.
