The wave counting for the Pound/Dollar instrument looks very similar to the wave counting on the Euro/Dollar instrument. The assumed wave c for the Pound/Dollar instrument can also be completed and can also take on a much more complex and extended form. The rise in quotes of the instrument on Friday and Monday amounted to about 110 basis points, which led to the exit beyond the previous local peak of July 6. Thus, according to the pound, confirmation of the markets' readiness to build a new upward trend section has been received. However, today the instrument's quotes began to decline, which totaled 100 basis points. The three-wave downward structure of the wave looks quite convincing, but it can easily take on a five-wave form. I am currently awaiting the construction of a new three-wave structure upward. But, unfortunately, the instrument, being inside the correction structures, can build almost any set of waves, of any size and composition.
The Pound/Dollar instrument lost ground on Tuesday thanks to the report on US inflation, which rose to 5.4% YoY in June, although the markets expected it to decline to 4.9% YoY. In addition, the core consumer price index rose to 4.5% YoY. On a monthly basis, inflation jumped 0.9% in June, while core inflation also added 0.9% MoM. Thus, all inflation indicators rose sharply compared to May. Markets, as I said, have responded with increased demand for the US dollar, further confusing the current wave pattern. The speech of the Governor of the Bank of England, Andrew Bailey, did not give anything today. But tomorrow, the UK will release its own inflation indicator.
According to forecasts, the consumer price index will grow to 2.2% YoY. Let me remind you that the UK does not expect inflation above 3%, as Andrew Bailey has repeatedly stated personally. However, the US also hardly expected inflation above 5%, which is a record for the last 10 years. Thus, surprises may arrive from the UK tomorrow morning. If the markets reacted today with an increase in demand for the dollar with increased inflation, then tomorrow we can see a similar picture with the pound. The only question is how much inflation will increase in Britain. Also tomorrow evening, there will be a speech by Fed Chairman Jerome Powell, who can just comment on the latest inflation report. There is no doubt that the markets will be looking forward to his speech and new hints about the completion of economic stimulus programs.
At this time, the wave pattern has cleared up a bit but remains very complex. The construction of the downward trend is supposedly completed. Thus, I recommend now to buy the instrument again with targets located above the 40th figure, for each MACD signal "up". If the instrument makes a successful attempt to break through the 40th figure, then the ascending set of waves will take a more convincing form.
The upward section of the trend, which began its construction a couple of months ago, has taken on a rather ambiguous form and has already been completed. However, the wave counting still looks rather complicated, as there is no impulse movement now. At this time, the construction of the downward part of the trend is presumably completed, so we can expect a new increase in quotes to the maximum of wave e.
