GBP/USD. Analysis for April 13th. Britain will avoid recession – Jeremy Hunt
April 13, 2023 5:22 pm
For the pound/dollar pair, the wave analysis still looks complicated. Since the current upward wave’s peak has surpassed the last wave b, the entire downward trend segment consisting of wave patterns a-b-c can be considered complete. Although it barely resembles the trend segment for the same period for the euro currency, it should be acknowledged that both pairs have built descending three-wave sets of waves. If true, a new upward trend segment has begun for the pound. Since I can only identify one wave starting from March 8th, there is reason to assume that the increase in the British currency will be prolonged. It is difficult to say how it will be done simultaneously for the euro currency. Both pairs should build similar wave formations, but there have been some problems lately. For the British currency, wave b may begin soon, after which the increase in quotes should resume with targets up to the 30-figure mark. Unless wave c turns out to be the same as in the case of a descending set of waves. But the news background is ambiguous now, and I would not bet on the strong growth of the British currency, relying only on it.
The dollar is weakening every day.
The exchange rate of the pound/dollar pair on Thursday increased by another 30 basis points and reached the peak of the previous wave 1 or a. A successful attempt to break through this peak will indicate that the first wave of the new upward trend segment still needs to be completed and will take on a longer form. Today, the news background for the British currency was not favorable. However, demand for it is still increasing after yesterday’s report on inflation in the United States, which was unexpected for many. The market expected a slowdown to 5.2%, which is 0.8% less than in February, but the consumer price index fell to 5.0% per annum. No one paid attention to the report on core inflation, which unexpectedly increased. I am not a supporter of the growth of the pound sterling at this time. At least today, demand for it could fall, and I don’t see any need to complicate the first wave. However, the market has its point of view on this issue.
On Wednesday, British Finance Minister Jeremy Hunt said that economic growth in February was more positive than expected and that the outlook looks more optimistic than it did a few months ago. Let me remind you that this morning the GDP report for February was 0.0%, which is lower than forecasts. However, Jeremy Hunt saw a positive signal in the zero growth of the economy. Let’s try to take his word for it. Also, the British Finance Minister said that a recession would be avoided, which I highly doubt. But due to such signals to the market from high-ranking officials, there is high demand for the British currency.
General conclusions.
The wave pattern of the Pound/Dollar pair suggests the completion of the downward trend segment. The wave analysis is now ambiguous, as is the news background. I do not see factors supporting the British currency in the long term, and now the formation of wave b may begin. A decline in the pair is more likely, as all waves recently have been approximately the same size. Trading can now be done from the 1.2440 mark, corresponding to 0.0% on Fibonacci. Below it – sell; above it – cautiously buy.
The picture is similar to the Euro/Dollar pair on the larger wave scale, but some differences remain. At this time, the ascending corrective trend segment has been completed. But the three-wave descending segment may have already been completed as well. The new ascending trend segment may also be three-wave or horizontal.
The material has been provided by InstaForex Company – www.instaforex.com
For the pound/dollar pair, the wave analysis still looks complicated. Since the current upward wave’s peak has surpassed the last wave b, the entire downward trend segment consisting of wave patterns a-b-c can be considered complete. Although it barely resembles the trend segment for the same period for the euro currency, it should be acknowledged that both pairs have built descending three-wave sets of waves. If true, a new upward trend segment has begun for the pound. Since I can only identify one wave starting from March 8th, there is reason to assume that the increase in the British currency will be prolonged. It is difficult to say how it will be done simultaneously for the euro currency. Both pairs should build similar wave formations, but there have been some problems lately. For the British currency, wave b may begin soon, after which the increase in quotes should resume with targets up to the 30-figure mark. Unless wave c turns out to be the same as in the case of a descending set of waves. But the news background is ambiguous now, and I would not bet on the strong growth of the British currency, relying only on it.
The dollar is weakening every day.
The exchange rate of the pound/dollar pair on Thursday increased by another 30 basis points and reached the peak of the previous wave 1 or a. A successful attempt to break through this peak will indicate that the first wave of the new upward trend segment still needs to be completed and will take on a longer form. Today, the news background for the British currency was not favorable. However, demand for it is still increasing after yesterday’s report on inflation in the United States, which was unexpected for many. The market expected a slowdown to 5.2%, which is 0.8% less than in February, but the consumer price index fell to 5.0% per annum. No one paid attention to the report on core inflation, which unexpectedly increased. I am not a supporter of the growth of the pound sterling at this time. At least today, demand for it could fall, and I don’t see any need to complicate the first wave. However, the market has its point of view on this issue.
On Wednesday, British Finance Minister Jeremy Hunt said that economic growth in February was more positive than expected and that the outlook looks more optimistic than it did a few months ago. Let me remind you that this morning the GDP report for February was 0.0%, which is lower than forecasts. However, Jeremy Hunt saw a positive signal in the zero growth of the economy. Let’s try to take his word for it. Also, the British Finance Minister said that a recession would be avoided, which I highly doubt. But due to such signals to the market from high-ranking officials, there is high demand for the British currency.
General conclusions.
The wave pattern of the Pound/Dollar pair suggests the completion of the downward trend segment. The wave analysis is now ambiguous, as is the news background. I do not see factors supporting the British currency in the long term, and now the formation of wave b may begin. A decline in the pair is more likely, as all waves recently have been approximately the same size. Trading can now be done from the 1.2440 mark, corresponding to 0.0% on Fibonacci. Below it – sell; above it – cautiously buy.
The picture is similar to the Euro/Dollar pair on the larger wave scale, but some differences remain. At this time, the ascending corrective trend segment has been completed. But the three-wave descending segment may have already been completed as well. The new ascending trend segment may also be three-wave or horizontal.
The material has been provided by InstaForex Company – www.instaforex.com
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