The wave counting for the Pound/Dollar instrument still raises many questions. The last decline of the instrument is identified as a new wave a as part of a new downward wave structure or as a wave e. In the second case (ideal for markets), the construction of a downward trend section is completed. If this is true, then after a short pause to build a corrective wave, the increase in the quotes of the instrument will resume. The instrument may again form a correction, or it may start an impulse one.
From my point of view, the construction of an upward trend section is highly probable. However, I draw attention to the fact that the Euro/Dollar instrument has been in one place all week, and the Pound/Dollar instrument has shown an impressive amplitude on any day of the current week. Accordingly, the news background still had a strong impact on the market, although it was of a non-economic nature. Thus, the activity of the markets may remain high next week, and the direction of movement of the instrument will not least depend on it.
The Pound/Dollar instrument showed a smaller amplitude on Friday than in the previous days of this week. It seems that the markets have calmed down a little about the pandemic in the UK, which has slowly begun to subside. As a result, the pound sterling fell by 250 basis points on Friday and Tuesday, and increased by 200 on Wednesday and Thursday. Thus, at the moment, the pound remains almost the same as a week ago.
The news background on Friday was quite weak for the pound. Retail trade in June increased by 0.5% MoM and by 9.7% YoY. This is taking into account fuel costs. Excluding, it grew by 0.3% MoM and by 7.4% YoY. It was the second indicator that disappointed the markets, since the price of fuel has been growing in recent months, so it is more correct to consider the dynamics of retail sales without it. And without it, the indicators did not reach the expectations of the markets, so in the morning, the pound was declining.
Business activity reports were also disappointing. For the manufacturing sector, the indicator fell from 63.9 points to 60.4% in July. For the service sector, from 62.4 points to 57.8. Despite the fact that any value of business activity above 50 is considered positive, I can't help but note a sharp decline in both. This is probably due to the fourth wave of the pandemic in Britain and the fears of the markets about a new lockdown in the country.
At the moment, the wave pattern remains very complex. The construction of the downward trend section is presumably completed, but it can still take a more complex form. However, I still expect the construction of a new upward trend section, so I recommend buying the instrument for each MACD signal "up" with targets located near the 1.3872 mark, which corresponds to 23.6% Fibonacci.
The upward section of the trend, which began its construction a couple of months ago, has taken a rather ambiguous form and has already been completed. However, the wave marking still looks quite complicated, since there is no impulse movement now. At this time, it is assumed that the construction of a complicated downward trend section has been completed, which may have taken the form of a-b-c-d-e.