There were no significant price changes on Monday. Both instruments showed very weak dynamics from the morning, which implies that we shouldn't expect any notable movements. This market behavior was also evident over the weekend when the economic events calendar was released. European Central Bank President Christine Lagarde and Vice President Luis de Guindos were scheduled to speak on Monday. And that was the end of the list of important events for the day. Lagarde spoke a little later than de Guindos, so let's see what the latter had to say.
Cutting to the chase, nothing. He commented on the economy and monetary policy without using any new theses. Honestly, I expected him to speak on how the central bank would act now, given the drop in the Consumer Price Index to 2.4%, but the markets didn't get anything like that from him. De Guindos only said that the latest inflation report is a pleasant surprise, but it is still too early to celebrate victory over high inflation. According to him, an increase in wage growth rates can still lead to a new rise in inflation. He also noted that the energy market is unstable, and oil and gas prices could start rising, stimulating inflation.
De Guindos' final remark was the already familiar phrase, "monetary policy will depend on incoming data." What can I say about this speech? First, there were no other news, so the market couldn't pay attention to anything else. Second, de Guindos didn't convey anything new or important. Third, the market hardly reacted to his speech. Fourth, almost all speeches by ECB members in the last two months have not carried any potentially important information.
Therefore, I can advise you to pay less attention to such events like their speeches. They currently do not provide anything new and interesting to the market.
Based on the analysis, I conclude that a bearish wave pattern is still being formed. The pair has reached the targets around the 1.0463 mark, and the fact that the pair has yet to breach this level indicates that the market is ready to build a corrective wave. It seems that the market has completed the formation of wave 2 or b, so in the near future I expect an impulsive descending wave 3 or c with a significant decline in the instrument. I still recommend selling with targets below the low of wave 1 or a. But be cautious with short positions, as wave 2 or b may take a more extended form. A successful attempt to break the 1.0851 level could signal a decline in the instrument.
The wave pattern for the GBP/USD pair suggests a decline within the downtrend. The most that we can count on is a correction. At this time, I can recommend selling the instrument with targets below the 1.2068 mark because wave 2 or b will eventually end and at any time, and it could happen at any moment. The longer it takes, the stronger the fall. The narrowing triangle is a harbinger to the end of the movement.
