GBP/USD. Analysis for May 17. Taxes in the UK may be reduced
May 17, 2023 6:22 pm
The wave analysis of the GBP/USD pair still needs to look more complex and ambiguous because it does not look like a classical correction or impulse segment of the trend. Since the current upward wave’s peak has exceeded the last wave b’s peak, the trend’s entire downward segment, consisting of waves a-b-c, can be considered complete. Therefore, a new upward trend segment is now being built for the pound. Starting March 8, I can only single out one wave of the current scale, so there are all reasons to assume that forming a new trend segment will take a long time.
Both pairs should build similar wave formations. If this is the case, then wave 2 or b for the pound can be extended, and at the same time, a downward three-wave can be built for the euro. Therefore, I expect a deep wave b, as with the formation of the previous three waves. Therefore, a decline in the pair can be expected to the 1.1850 mark or a little higher. At the moment, wave 1 or a has all the chances to be considered complete, but there are still certain doubts.
Jeremy Hunt confirms high inflation.
The GBP/USD pair did not change on Wednesday. The day started quite positively, from the point of view of the current wave analysis, but closer to the end of the day, an increase began, which again casts doubt on the market’s readiness to build a corrective wave b. The second unsuccessful attempt to break through the 100.0% Fibonacci level also speaks volumes. The quotes’ retreat from the reached maximums is quite weak, so I wonder if the second corrective wave has begun forming. The news background today was insignificant. In the US, a report was released on the number of building permits issued in April, which was slightly below market expectations. This report could have caused a decrease in demand for the dollar in the last few hours. However, in any case, the amplitude of the movements today was again low.
In the UK today, the Governor of the Bank of England, Andrew Bailey, spoke, which I will discuss separately. In addition to Bailey’s speech, Finance Minister Jeremy Hunt gave a speech. Hunt stated that the Treasury supports the Bank of England 100%, and inflation cannot start to decrease “automatically.” It requires a monetary influence. He expressed regret that the standard of living of the British and their real incomes have been decreasing recently and also expressed the need to lower taxes. However, whether there will be an opportunity to lower taxes before the elections is still being determined. Hunt confirmed that the main goal of the bank remains to reduce inflation. A little earlier, Andrew Bailey stated that he expects inflation to fall to 5% by the end of the year.
General conclusions.
The wave pattern of the GBP/USD pair has long suggested the formation of a new downward wave. I don’t see factors that support the pound in the long term, and wave b could turn out to be very deep, but so far, there is no complete confidence that it has started. A decrease in the pair is more likely now, but the first wave of the ascending section can become even more complicated. The unsuccessful attempt to break through the 1.2615 mark, which corresponds to 127.2% according to Fibonacci, indicates the market’s readiness for sales. Still, according to Fibonacci, there was also an unsuccessful attempt to break through the 1.2445 mark, which equates to 100.0%.
The picture is similar to the EUR/USD pair on the older wave scale, but there are still some differences. The downward corrective segment of the trend is complete, but at this time, the formation of a downward wave may begin. And this wave can turn out to be deep and extended, and the entire trend segment – horizontal, like the previous one.
The material has been provided by InstaForex Company – www.instaforex.com
The wave analysis of the GBP/USD pair still needs to look more complex and ambiguous because it does not look like a classical correction or impulse segment of the trend. Since the current upward wave’s peak has exceeded the last wave b’s peak, the trend’s entire downward segment, consisting of waves a-b-c, can be considered complete. Therefore, a new upward trend segment is now being built for the pound. Starting March 8, I can only single out one wave of the current scale, so there are all reasons to assume that forming a new trend segment will take a long time.
Both pairs should build similar wave formations. If this is the case, then wave 2 or b for the pound can be extended, and at the same time, a downward three-wave can be built for the euro. Therefore, I expect a deep wave b, as with the formation of the previous three waves. Therefore, a decline in the pair can be expected to the 1.1850 mark or a little higher. At the moment, wave 1 or a has all the chances to be considered complete, but there are still certain doubts.
Jeremy Hunt confirms high inflation.
The GBP/USD pair did not change on Wednesday. The day started quite positively, from the point of view of the current wave analysis, but closer to the end of the day, an increase began, which again casts doubt on the market’s readiness to build a corrective wave b. The second unsuccessful attempt to break through the 100.0% Fibonacci level also speaks volumes. The quotes’ retreat from the reached maximums is quite weak, so I wonder if the second corrective wave has begun forming. The news background today was insignificant. In the US, a report was released on the number of building permits issued in April, which was slightly below market expectations. This report could have caused a decrease in demand for the dollar in the last few hours. However, in any case, the amplitude of the movements today was again low.
In the UK today, the Governor of the Bank of England, Andrew Bailey, spoke, which I will discuss separately. In addition to Bailey’s speech, Finance Minister Jeremy Hunt gave a speech. Hunt stated that the Treasury supports the Bank of England 100%, and inflation cannot start to decrease “automatically.” It requires a monetary influence. He expressed regret that the standard of living of the British and their real incomes have been decreasing recently and also expressed the need to lower taxes. However, whether there will be an opportunity to lower taxes before the elections is still being determined. Hunt confirmed that the main goal of the bank remains to reduce inflation. A little earlier, Andrew Bailey stated that he expects inflation to fall to 5% by the end of the year.
General conclusions.
The wave pattern of the GBP/USD pair has long suggested the formation of a new downward wave. I don’t see factors that support the pound in the long term, and wave b could turn out to be very deep, but so far, there is no complete confidence that it has started. A decrease in the pair is more likely now, but the first wave of the ascending section can become even more complicated. The unsuccessful attempt to break through the 1.2615 mark, which corresponds to 127.2% according to Fibonacci, indicates the market’s readiness for sales. Still, according to Fibonacci, there was also an unsuccessful attempt to break through the 1.2445 mark, which equates to 100.0%.
The picture is similar to the EUR/USD pair on the older wave scale, but there are still some differences. The downward corrective segment of the trend is complete, but at this time, the formation of a downward wave may begin. And this wave can turn out to be deep and extended, and the entire trend segment – horizontal, like the previous one.
The material has been provided by InstaForex Company – www.instaforex.com
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