The UK won't have much going on next week. Over the past five trading days, the UK only released one report, which initially didn't generate any interest in the market. The market is reluctant to trade the pound, but the currency still has the potential to fall. The question is how and based on what?
Usually, the news background can help in this matter, but in recent months, the market hasn't been paying attention to this. I highly doubt that the recent news background can be considered well balanced, one that can alternately support both buyers and sellers. The problem lies in the market itself, which is either waiting for a favorable time to open new long positions (which do not fit the wave pattern), or that they simply don't understand what to do with the pound. Either way, even strong news that work in favor of sellers does not lead to the decline that GBP/USD deserves.
What can I highlight in the UK's calendar of events? The Services Purchasing Managers' Index for February is secondary of importance. The same index for the construction sector is secondary as well. There is nothing else interesting in the events calendar. Therefore, based on this, I cannot expect a high range of movements from the British pound next week. It is quite fortunate that there is at least a descending channel now, so we can expect a certain movement from GBP/USD. But this is quite doubtful as well. Throughout the past week, the pair traded around its upper line, and literally one important report can lead to a successful attempt to break this line.
If this happens, I will return to the scenario of a horizontal movement in the range of 1.2500-1.2822. Since this range is quite wide, and movements are very weak, it will also be difficult to benefit from it. It may take several weeks to move from the lower to the upper line of the range. We can only place our hopes on strong US data. In the next review, I will try to figure out whether the dollar can expect support from America.
Wave pattern for EUR/USD:
Based on the conducted analysis of EUR/USD, I conclude that a bearish wave set is being formed. Wave 2 or b is complete, so in the near future, I expect an impulsive downward wave 3 or c to form with a significant decline in the instrument. An internal corrective wave is currently being formed, which may already have a complete form. I am considering short positions with targets around the level of 1.0462, which corresponds to 127.2% according to Fibonacci.
Wave pattern for GBP/USD:
The wave pattern of the GBP/USD instrument suggests a decline. I am considering selling the instrument with targets below the 1.2039 level, as I believe that wave 3 or C will eventually gain momentum. A successful attempt to break through the 1.2627 level generated a sell signal, but at the moment, I can also identify a new sideways movement with the lower boundary at the 1.2500 level. In my opinion, this level currently acts as a limit for the pound's decline. I can also highlight a descending channel, which suggests a decline in quotes.
