The wave analysis for the pound/dollar pair currently appears to be challenging but does not call for any clarifications. There are some distinctions between the wave patterns of the euro and the pound, including the euro’s current high likelihood of growth. I believe that the downward part of the trend is still being built at this time. Given that the pair has descended below wave a’s low, even by a few points, wave c has already taken on an extended form. Although it should be emphasized that forecasts do not often match reality, I predict a sharper decrease in the value of the pound sterling. If the euro’s downward trend is complete, there is a greater than 50% chance that all ended on wave c for the British pound. Additionally, the moves that follow it are not waves but rather the initial wave of a new upward trend segment. The pair may very well turn the December 13-originating downward segment of the trend into a five-wave corrective. The wave analysis would have looked more convincing in this scenario, but once again, there is a very slight possibility that the euro and the pound would develop completely separate trends. And to the Europeans, everything appears to be pointing toward the start of a move upward.
The pound is looking for explanations.
On Monday, the pound/dollar exchange rate rose by 50 basis points. This may not seem like much, but on this particular day, the news was essentially nonexistent. There was only the introduction of Andrew Bailey, Governor of the Bank of England, who spoke primarily about the failure of American institutions and Credit Suisse. He emphasized that interest rates should not increase to their 2008 highs while noting the strength and stability of the UK financial system. However, Bailey said the tightening of monetary policy should continue as inflationary pressures remain. His language can be characterized as “moderate.” On the one hand, according to Bailey, rates will keep rising. He provided a distinct benchmark for 2008 when the rate was close to 6%. So, the value of 5% may rise another 1-2 times. Since the market was unsure of what to anticipate from the Bank of England in the coming months, I believe this is excellent news for the pound. It is now obvious that the tightening will go on.
There are more and more arguments in support of keeping the British dollar rising given the wave markup. Only the US and UK’s GDP figures, which will be made public on Thursday and Friday, can stop the market from seeing an increase in demand this week. However, they will not be able to rely on them. The issue of inflation continues to be prioritized by central banks, and it is particularly important for Britain because there the consumer price index is once again rising and has not yet been able to drop even below the psychological mark of 10%. Therefore, if Bailey’s statements are to be believed, the rate of rise in England will be greater than in the United States.
Conclusions in general
The wave pattern of the pound/dollar pair presumably represents the end of a segment of a downward trend (solely due to the correlation of the euro and the pound). According to the “up” reversals of the MACD indicator, it is possible to take into account purchases with targets higher than the 25-figure range at this moment. The possibility of developing a downward wave e, the targets of which are situated 500–600 points below the current price, is something I do not entirely rule out, though.
The picture resembles that of the euro/dollar pair at higher wave scales, but there are still minor differences. The upward correction part of the trend has now been finished. If this presumption is true, we should be expecting the development of a downward section to last for five waves with a potential fall in the range of 14–16 figures.
The material has been provided by InstaForex Company – www.instaforex.com
The wave analysis for the pound/dollar pair currently appears to be challenging but does not call for any clarifications. There are some distinctions between the wave patterns of the euro and the pound, including the euro’s current high likelihood of growth. I believe that the downward part of the trend is still being built at this time. Given that the pair has descended below wave a’s low, even by a few points, wave c has already taken on an extended form. Although it should be emphasized that forecasts do not often match reality, I predict a sharper decrease in the value of the pound sterling. If the euro’s downward trend is complete, there is a greater than 50% chance that all ended on wave c for the British pound. Additionally, the moves that follow it are not waves but rather the initial wave of a new upward trend segment. The pair may very well turn the December 13-originating downward segment of the trend into a five-wave corrective. The wave analysis would have looked more convincing in this scenario, but once again, there is a very slight possibility that the euro and the pound would develop completely separate trends. And to the Europeans, everything appears to be pointing toward the start of a move upward.
The pound is looking for explanations.
On Monday, the pound/dollar exchange rate rose by 50 basis points. This may not seem like much, but on this particular day, the news was essentially nonexistent. There was only the introduction of Andrew Bailey, Governor of the Bank of England, who spoke primarily about the failure of American institutions and Credit Suisse. He emphasized that interest rates should not increase to their 2008 highs while noting the strength and stability of the UK financial system. However, Bailey said the tightening of monetary policy should continue as inflationary pressures remain. His language can be characterized as “moderate.” On the one hand, according to Bailey, rates will keep rising. He provided a distinct benchmark for 2008 when the rate was close to 6%. So, the value of 5% may rise another 1-2 times. Since the market was unsure of what to anticipate from the Bank of England in the coming months, I believe this is excellent news for the pound. It is now obvious that the tightening will go on.
There are more and more arguments in support of keeping the British dollar rising given the wave markup. Only the US and UK’s GDP figures, which will be made public on Thursday and Friday, can stop the market from seeing an increase in demand this week. However, they will not be able to rely on them. The issue of inflation continues to be prioritized by central banks, and it is particularly important for Britain because there the consumer price index is once again rising and has not yet been able to drop even below the psychological mark of 10%. Therefore, if Bailey’s statements are to be believed, the rate of rise in England will be greater than in the United States.
Conclusions in general
The wave pattern of the pound/dollar pair presumably represents the end of a segment of a downward trend (solely due to the correlation of the euro and the pound). According to the “up” reversals of the MACD indicator, it is possible to take into account purchases with targets higher than the 25-figure range at this moment. The possibility of developing a downward wave e, the targets of which are situated 500–600 points below the current price, is something I do not entirely rule out, though.
The picture resembles that of the euro/dollar pair at higher wave scales, but there are still minor differences. The upward correction part of the trend has now been finished. If this presumption is true, we should be expecting the development of a downward section to last for five waves with a potential fall in the range of 14–16 figures.
The material has been provided by InstaForex Company – www.instaforex.com
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