Analysis of GBP/USD on August 31st. The dollar finds it harder to stand up against the pound
August 31, 2023 6:22 pm
For the GBP/USD, the wave pattern remains relatively straightforward. The construction of rising wave 3 or “c” has possibly finished, and forming a presumed new downward trend segment has begun. Theoretically, this could still be the “d” wave, but the likelihood is now approaching zero. The pound has a basis to resume its rise. However, the wave pattern has transformed into something more complex, and wave 3 or “c” has taken on a more extended form than many analysts anticipated a few months ago. The entire upward trend segment may still take on a five-wave form if the market finds new reasons for long-term purchases.
I anticipate the continuation of a downward wave set, but currently, we might see the construction of an upward correctional wave 2 or “b.” Regarding the European currency, there has also been a rebound from the reached lows. Therefore, the pair may experience an uptick for some time, but subsequently, the construction of wave 3 or “c” should begin with targets below the 25 figure. I also anticipate a much steeper decline.
There was no weak data from Britain, but more is yet to come. The GBP/USD rate decreased by 55 basis points on Thursday, weaker than the euro/dollar pair. This can be explained by the fact that European and German reports did not impact the pound sterling, nor were they expected to. Hence, we currently observe only a retreat from the reached peaks for the pound, which might end as soon as tomorrow if US data doesn’t impress with high values.
There are several reports in the US today, but it’s challenging to name even one significant among them. First, the decline started in the morning, hours before the American reports were released. Second, the report values were bland, barely differing from market expectations. In such cases, the market usually overlooks the data. Thus, all four publications (personal income and expenditures, consumer price index, and initial unemployment claims) didn’t influence market sentiment.
What’s next? For now, the rising wave doesn’t seem convincing. Within the decline since July 14, we’ve already seen several rising waves of the same size. Therefore, such an upward movement doesn’t qualify as a global correctional wave. If the upward trend doesn’t resume tomorrow, the first wave of the new downward trend segment will merely assume a more prolonged form, and in the future, the pound may decline even more sharply than I currently anticipate. However, everything will depend on tomorrow’s US reports.
General conclusions:
The pound/dollar pair wave pattern suggests a decline within the downward trend segment. There’s a risk that the current downward wave will end if it’s labeled as “d” instead of “1”. In that case, the construction of wave 5 might start from the current levels. However, we are currently witnessing the formation of the second wave as part of a new declining trend segment. By the end of the week, the demand for the dollar will depend on the news background from the US; based on these reports, conclusions about the possible end of the second wave can be drawn. Sales should be resumed after that.
On a larger wave scale, the pattern looks similar to the euro/dollar pair, but some differences remain. The downward correctional trend segment has ended, and the construction of a new upward segment is ongoing, which might already be finished or take on a full-fledged five-wave form.
The material has been provided by InstaForex Company – www.instaforex.com
For the GBP/USD, the wave pattern remains relatively straightforward. The construction of rising wave 3 or “c” has possibly finished, and forming a presumed new downward trend segment has begun. Theoretically, this could still be the “d” wave, but the likelihood is now approaching zero. The pound has a basis to resume its rise. However, the wave pattern has transformed into something more complex, and wave 3 or “c” has taken on a more extended form than many analysts anticipated a few months ago. The entire upward trend segment may still take on a five-wave form if the market finds new reasons for long-term purchases.
I anticipate the continuation of a downward wave set, but currently, we might see the construction of an upward correctional wave 2 or “b.” Regarding the European currency, there has also been a rebound from the reached lows. Therefore, the pair may experience an uptick for some time, but subsequently, the construction of wave 3 or “c” should begin with targets below the 25 figure. I also anticipate a much steeper decline.
There was no weak data from Britain, but more is yet to come. The GBP/USD rate decreased by 55 basis points on Thursday, weaker than the euro/dollar pair. This can be explained by the fact that European and German reports did not impact the pound sterling, nor were they expected to. Hence, we currently observe only a retreat from the reached peaks for the pound, which might end as soon as tomorrow if US data doesn’t impress with high values.
There are several reports in the US today, but it’s challenging to name even one significant among them. First, the decline started in the morning, hours before the American reports were released. Second, the report values were bland, barely differing from market expectations. In such cases, the market usually overlooks the data. Thus, all four publications (personal income and expenditures, consumer price index, and initial unemployment claims) didn’t influence market sentiment.
What’s next? For now, the rising wave doesn’t seem convincing. Within the decline since July 14, we’ve already seen several rising waves of the same size. Therefore, such an upward movement doesn’t qualify as a global correctional wave. If the upward trend doesn’t resume tomorrow, the first wave of the new downward trend segment will merely assume a more prolonged form, and in the future, the pound may decline even more sharply than I currently anticipate. However, everything will depend on tomorrow’s US reports.
General conclusions:
The pound/dollar pair wave pattern suggests a decline within the downward trend segment. There’s a risk that the current downward wave will end if it’s labeled as “d” instead of “1”. In that case, the construction of wave 5 might start from the current levels. However, we are currently witnessing the formation of the second wave as part of a new declining trend segment. By the end of the week, the demand for the dollar will depend on the news background from the US; based on these reports, conclusions about the possible end of the second wave can be drawn. Sales should be resumed after that.
On a larger wave scale, the pattern looks similar to the euro/dollar pair, but some differences remain. The downward correctional trend segment has ended, and the construction of a new upward segment is ongoing, which might already be finished or take on a full-fledged five-wave form.
The material has been provided by InstaForex Company – www.instaforex.com
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