The section of trend, which started on September 23, has taken a complete five-wave form. However, the internal wave pattern of the supposed wave 5 in 5 does not look entirely convincing, which may require some additions and adjustments in the entire wave 5. Nevertheless, the upward trend has been long nearing its end. On the other hand, the demand for the pound remains quite high. A successful attempt to break the previous high (around 1.37th mark) will further complicate the upward section of trend.
The wave marking in the smaller time frame also made certain changes and may likely be corrected again. Currently, it is quite possible to continue the quotes' growth within the 5 in 5 in 5 wave, but the wave pattern of wave 5 to 5 does not look very convincing. So, we should be cautious with the subtle point. The 127.2% Fibonacci level is important, and a successful breakout attempt will indicate that the markets are ready for a new increase. An unsuccessful one, in turn, can lead to the end of the entire upward section of the trend.
On another note, the UK is tightening its quarantine measures for those who will arrive in the country. Starting January 18, any citizen who enters the country must present a negative COVID-19 test and only then can he continue his journey further. Moreover, British Prime Minister Boris Johnson said that the country is closing the possibility of travel to travelers without any responsibility and checks to prevent the emergence of new, not yet studied strains of "coronavirus". He believes that the new rules, together with a total "lockdown", should be in effect until at least February 15, when most of the vulnerable citizens will have to be vaccinated. At the same time, several British TV channels announced that one of the two "Brazilian" strains had already been discovered in the UK. Nonetheless, Britain has already begun to carry out mass vaccinations and about 3 million people have received their vaccine, as 140 vaccinations are given every minute in the country. The government believes that until September, the entire adult population of Britain will receive the vaccine. 14 million of the UK's most vulnerable citizens are due to be vaccinated by mid-February, during the easing of quarantine.
Friday's economic reports were not in favor of the pound and the dollar. The GDP report in the UK was slightly better than expected, but still negative. Industrial production, which is better than forecasted, is also negative. Meanwhile, US retail sales were weaker than forecasted, while industrial production was better. Overall, these reports did not affect the market sentiment.
General conclusions and recommendations:
The GBP/USD pair can continue building the upward section of the trend. Thus, it is recommended to buy this pair after it successfully breaks through the 127.2% Fibonacci level, with targets located near the 40th mark located within the expected 5 in 5 in 5 wave of the upward trend section. But if it fails to do so, the quotes may exit the reached highs. In addition, you can also slowly look at sales, since three unsuccessful attempts to break through the 37th figure suggest a possible completion of the upward section of the trend.
