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GBP/USD. Analysis for November 1st. The dollar is experiencing problems before the FOMC meeting
November 1, 2023 4:23 pmVideo
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Regarding the pound/dollar pair, the wave analysis remains fairly straightforward and clear. The construction of a new downward trend segment continues, with the first wave taking on a fairly extended form. In my view, the British currency has no grounds to resume an upward trend segment, so I do not even consider such a scenario. The assumed wave 1 or a is complete, although this conclusion is not as obvious for the Pound as it is for the Euro. Wave 2 or b for the euro already has a three-wave pattern, but not for the pound. Undoubtedly, the corrective wave may be quite simple, but I still believe it should take on at least a three-wave form. Unfortunately, the Pound has started to ail once again with the same ailment it had in 2022, when it was practically in freefall.
The internal wave structure of the first wave of the new trend segment looks complex, and it is difficult to discern five waves within it. However, five waves are visible for the euro. If the global wave is complete for the euro, then there is an 80% probability that it is complete for the pound as well. But when it comes to wave 2 or b, things are not as straightforward. I believe that the correction may still develop further, despite the recent decline.
The exchange rate of the pound/dollar pair remained unchanged on Wednesday. Throughout the day, demand for the U.S. currency consistently increased. However, just an hour ago, the United States released the first labor market and job vacancy reports, which, to be honest, could have been better. In my review of the euro currency, I mentioned that only the ISM index for the manufacturing sector was weak. The number of job openings in JOLTS in September was 9.553 million, with market expectations at 9.25 million. The number of new non-farm jobs, according to the ADP agency, increased by 113,000, with a forecast of 150,000. The last report may seem weak, but compared to September, its value increased. Consequently, both of these reports can be considered positive.
However, I agree with the market that the ISM manufacturing sector business activity index is more important. Accordingly, the U.S. dollar has come under pressure from the market in the lead-up to the FOMC meeting results announcement. This movement does not affect the wave analysis of the euro currency. However, it can be vital for the pound. I still believe that wave 2 or b must be at least a three-wave pattern, and for that to happen, the demand for the pound must increase and the demand for the dollar must decrease, not the other way around.
General Conclusions.
The wave pattern of the pound/dollar pair implies a decline within a downward trend segment. The maximum the British currency can hope for is the construction of wave 2 or b. However, as we can see, there are currently significant issues even with the corrective wave. At this time, I would not recommend new sales, but I also do not advise buying, as the corrective wave is still relatively weak. In any case, this is a corrective wave. I recommend selling on a successful attempt to break through 1.2120, but these sales should be very cautious at first.
On a larger wave scale, the picture is similar to the euro/dollar pair, but there are still some differences. The construction of the downward correctional segment of the trend continues, with the first wave already taking on an extended form and having no connection to the previous upward trend segment.
The material has been provided by InstaForex Company – www.instaforex.com
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