GBP/USD. Analysis for October 12th. Disappointing British statistics again
October 12, 2023 4:23 pm
The wave analysis of the pound/dollar pair remains relatively straightforward and clear. The construction of a new downward trend is ongoing, with its first wave being significantly prolonged. In my view, the British currency has no grounds to resume an upward trend, so I don’t even consider such a scenario. Remember, there are no specific target wave sizes. The first wave can be constructed for an indefinite period without any restrictions. At the moment, all signs suggest that this wave is complete, but there remains a certain probability of further elongation.
The internal wave structure of the first wave of the new trend segment appears complex, and it’s challenging to discern five waves within it. However, five waves are visible for the euro currency. If the formation of the downward wave set is completed for the euro, then there’s an 80% likelihood that it will be finished for the pound as well. For the euro, the first wave is completed with a high probability. Demand for the pound has also been increasing in recent days, so I expect the construction of wave 2 or b in the near future.
GDP and CPI didn’t help the pound.
On Thursday, the pound/dollar exchange rate fell by 50 basis points, “thanks” to the US inflation report. Before the release of this report, the pair’s movements were quite calm and even sluggish. In the morning in Britain, reports were released, which could have acquired the status of “super important,” as we receive no other data from Britain at all. Therefore, market participants decided that it’s better to react to genuinely significant events and reports rather than try to extract something from mediocre data. Consequently, there was no reaction to the 0.2% increase in GDP. There was no reaction to the 0.7% decline in industrial production either. All the reaction was directed at American inflation. We observed a drop in the pair, along with an unsuccessful attempt to break the 1.2313 level, equivalent to 61.8% on the Fibonacci scale.
Based on the decline in quotes on Thursday, I am not in a hurry to conclude that the presumed wave 1 or a is resuming. A pullback within wave 2 or b is also possible. The wave itself has taken such an unconvincing form that it is very difficult to expect its completion right now. I believe that in the case of a resumption of the first wave, we should wait for some confirmations and not rush with new sales.
I also want to note the report on initial claims for unemployment benefits in the United States, which did not differ from market expectations and did not trigger any reaction. At the moment, a slight pullback is likely to happen, and then upward wave 2 or b will resume for another one to two weeks. Tomorrow, the news background will not provide us with a large number of news and events.
General Conclusions.
The wave pattern of the pound/dollar pair suggests a decline within a new downward trend. The maximum the British Pound can expect in the near future is the construction of wave 2 or b. However, even with the correctional wave, there are currently significant difficulties. At this point, I would not advise new sales, but I also do not recommend buying, as the correctional wave may turn out to be quite weak.
On a larger wave scale, the picture is similar to the euro/dollar pair, but there are still some differences. The downward correctional trend continues to be constructed, with its first wave already taking on an extended form and having no direct relation to the previous upward trend.
The material has been provided by InstaForex Company – www.instaforex.com
The wave analysis of the pound/dollar pair remains relatively straightforward and clear. The construction of a new downward trend is ongoing, with its first wave being significantly prolonged. In my view, the British currency has no grounds to resume an upward trend, so I don’t even consider such a scenario. Remember, there are no specific target wave sizes. The first wave can be constructed for an indefinite period without any restrictions. At the moment, all signs suggest that this wave is complete, but there remains a certain probability of further elongation.
The internal wave structure of the first wave of the new trend segment appears complex, and it’s challenging to discern five waves within it. However, five waves are visible for the euro currency. If the formation of the downward wave set is completed for the euro, then there’s an 80% likelihood that it will be finished for the pound as well. For the euro, the first wave is completed with a high probability. Demand for the pound has also been increasing in recent days, so I expect the construction of wave 2 or b in the near future.
GDP and CPI didn’t help the pound.
On Thursday, the pound/dollar exchange rate fell by 50 basis points, “thanks” to the US inflation report. Before the release of this report, the pair’s movements were quite calm and even sluggish. In the morning in Britain, reports were released, which could have acquired the status of “super important,” as we receive no other data from Britain at all. Therefore, market participants decided that it’s better to react to genuinely significant events and reports rather than try to extract something from mediocre data. Consequently, there was no reaction to the 0.2% increase in GDP. There was no reaction to the 0.7% decline in industrial production either. All the reaction was directed at American inflation. We observed a drop in the pair, along with an unsuccessful attempt to break the 1.2313 level, equivalent to 61.8% on the Fibonacci scale.
Based on the decline in quotes on Thursday, I am not in a hurry to conclude that the presumed wave 1 or a is resuming. A pullback within wave 2 or b is also possible. The wave itself has taken such an unconvincing form that it is very difficult to expect its completion right now. I believe that in the case of a resumption of the first wave, we should wait for some confirmations and not rush with new sales.
I also want to note the report on initial claims for unemployment benefits in the United States, which did not differ from market expectations and did not trigger any reaction. At the moment, a slight pullback is likely to happen, and then upward wave 2 or b will resume for another one to two weeks. Tomorrow, the news background will not provide us with a large number of news and events.
General Conclusions.
The wave pattern of the pound/dollar pair suggests a decline within a new downward trend. The maximum the British Pound can expect in the near future is the construction of wave 2 or b. However, even with the correctional wave, there are currently significant difficulties. At this point, I would not advise new sales, but I also do not recommend buying, as the correctional wave may turn out to be quite weak.
On a larger wave scale, the picture is similar to the euro/dollar pair, but there are still some differences. The downward correctional trend continues to be constructed, with its first wave already taking on an extended form and having no direct relation to the previous upward trend.
The material has been provided by InstaForex Company – www.instaforex.com
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