For the GBP/USD pair, the wave labeling remains quite understandable and simultaneously complex. The construction of a downward trend segment continues, the first wave of which has taken on a quite extended form. The second wave also turned out to be quite extended, which gives us every reason to expect a prolonged construction of the third wave.

At the moment, I am confident that the construction of wave 2 or b is complete. Wave 2 or b has taken on a three-wave form (A-B-C), but its internal wave structure is very complex. Wave 2 or b could theoretically extend to 100% of wave 1 or a. An unsuccessful attempt to break the level of 1.2876 (lower picture), which corresponds to 76.4% according to Fibonacci, may indicate the long-awaited completion of the upward wave.

Targets for the pair's decline within the presumed wave 3 or c are located below the level of 1.2039, which corresponds to the low of wave 1 or a. Unfortunately, wave labeling tends to become more complex and may not correspond to the news background. At the moment, I do not abandon the working scenario, but the market does not see reasons for long-term sales of the pair yet.

The pound maintains chances of declining to the 25th Figure

The GBP/USD pair rate changed by several basis points on Wednesday. The pair's movement amplitude is minimal, and the news background is practically absent. The market is dormant. And besides being dormant, there is doubt about what to do with the British currency. The wave picture continues to answer this question unambiguously: sell. However, it can be seen from the charts above and below that demand for the pound is falling very weakly and very rarely. For some unknown reason, the market continues to believe in the British pound, although, with the current state of the British economy, there are few reasons for optimism.

The market's positive attitude toward the pound is the Bank of England. Although at the last meeting, the number of Committee members voting for a rate hike decreased to zero, the regulator has yet to signal readiness to switch to a softer policy. This is not a sufficient reason for the high demand for the pound. The difference between the Fed and the Bank of England is that the former has been expected to cut rates for several months now, and the latter is not expected to ease. But in this case, we are only talking about market expectations. In reality, both central banks may start lowering rates synchronously or with a difference of at most one meeting. However, market participants currently need to take this information into account. But the pound still maintains prospects for a strong decline.

General Conclusions

The wave picture of the GBP/USD instrument still suggests a decline. At the moment, I consider selling the instrument with targets located below the level of 1.2039, as wave 3 or c will start sooner or later. However, as long as wave 2 or b is not completed with one hundred percent probability, an increase in the instrument can be expected up to the level of 1.3140, which corresponds to 100.0% according to Fibonacci. The construction of wave 3 or c may have already begun, but the retreat of quotes from the peaks reached still needs to be bigger to be confident in this conclusion.

The picture is similar to the EUR/USD instrument on a higher wave scale, but there are still some differences. The downward correctional segment of the trend continues to be constructed, and its second wave has taken on an extended form - to 76.4% of the first wave. An unsuccessful attempt to break this level could have led to the start of building 3 or c.

The main principles of my analysis:

1. Wave structures should be simple and understandable. Complex structures are difficult to play out and often entail changes.
2. If there is confidence in what is happening in the market, it is better to avoid entering it.
3. There is never one hundred percent certainty in the direction of movement. Remember about Stop Loss protective orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.