The wave marking on the Pound/Dollar instrument required clarifications, which were made. The upward wave that was constructed between May 13 and May 27 does not currently fit into the overall wave picture, but it can still be considered corrective as a segment of the downward trend. Thus, we can now definitively state that the construction of the upward correction section of the trend has been canceled, and the downward section of the trend will assume a longer and more complex shape. I'm not a big fan of continually complicating the wave marking when we're dealing with a strongly elongating trend zone. I believe it would be considerably more efficient to identify rare corrective waves, after which new impulse structures could be constructed. Currently, there are waves 1 and 2, so we can assume the instrument is in the process of constructing wave 3. If this is the case, the decline may continue with targets near the 161.8% Fibonacci level. The market has demonstrated that it is now more important for it to adhere to the trend than to mark waves.

Away from politics, focus solely on the economy.

During the month of July, the Pound/Dollar exchange rate increased by 30 basis points. Today, the amplitude of the instrument's movements was low, and the Briton is making hesitant attempts to generate a 3-wave internal corrective wave. I do not yet believe that wave 3 is complete, as the final segment of the downward trend will assume a non-pulse form, further confounding the wave structure. Even a failed attempt to surpass the 161.8 percent Fibonacci level should not result in the completion of wave 3 construction. However, market conditions are not always as desirable as we would like. This morning, reports on industrial production and GDP were released in the United Kingdom, and we can say without any false modesty that they were extremely positive. In particular, the GDP increased by 0.5% in May, while industrial production increased by 0.9%. Lesser expectations were held by the market. Despite these data, demand for the British did not increase, leading me to conclude that the market is awaiting an inflation report for the United States. This report is at the forefront of the entire trading week, and a great deal depends on it.

What are the British prospects for the near future? From my perspective, neither remains very modest, as the news background for this currency remains very weak. In spite of this, the wave pattern suggests that the downward segment of the trend could end in the near future. In recent weeks, the decline of the European currency has been much more pronounced, and its downward trend section can be described as impulsive. And the trend area for the British does not yet closely resemble the impulse area. If the demand for US currency increases today following the release of the inflation report, this will put a significant amount in its place. Wave 3 will prove to be more convincing, and with it, the entire section of the trend moving downward.

General conclusions

The increased complexity of the wave pattern of the pound/dollar pair now suggests a further decline. For each "down" MACD signal, I recommend selling the instrument with targets near the estimated mark of 1.1708, which corresponds to 161.8 percent Fibonacci. An unsuccessful attempt to surpass 1.708 may result in a departure of quotes from the reached lows, but it is unlikely to produce a corrective wave 4, as the final descending segment of the trend will assume a non-standard shape in this case.

At the higher wave scale, the image resembles the Euro/Dollar instrument very closely. The same ascending wave that does not conform to the current wave pattern, followed by the same three descending waves. Thus, one thing is unmistakable: the downward segment of the trend continues to develop and can reach almost any length.