The wave pattern for GBP/USD continues to indicate the formation of an upward wave structure, but in recent weeks it has taken on a complex and ambiguous form. The pound has declined too sharply, and therefore, the trend section that began on August 1 now looks uncertain. The first thought that comes to mind is a complication of the presumed wave 4, which may take on a three-wave form, with each of its sub-waves also consisting of three waves. In this case, a decline of the instrument toward the 1.31 and 1.30 levels can be expected.

However, the current downward wave structure has already taken on a three-wave form. From here, it could either develop into a five-wave structure or begin forming a new upward wave series. Naturally, I expect only an increase in quotes regardless of the trend structure. In my view, the news background is now so unambiguous that no other outcome should be expected. Nevertheless, in recent weeks, buyers have been performing very poorly.

At present, much in the currency market depends on Donald Trump's policies. The market fears that the Federal Reserve may ease its policy under pressure from the U.S. president, while Trump himself continues to introduce new tariff packages, signaling the continuation of the trade war. Consequently, the news background remains unfavorable for the dollar.

The GBP/USD pair fell by 15 basis points on Friday, which is an insignificant change. There was no economic news today, but the flow of political headlines remains relentless. Trump continues to exert all kinds of pressure on China — one day announcing astronomical new tariffs, and the next calling China a "friend" and promising to reach an agreement. The entire currency market continues to swing along on these emotional "roller coasters." I get the impression that market participants no longer react to 80% of Trump's statements, fully aware that tomorrow he may use completely different rhetoric. Therefore, it makes more sense to react to actual events and decisions rather than to new promises and threats.

In recent weeks, the market had grounds for renewed purchases of the euro and the pound, but it has been in no hurry to make decisions. Virtually all key issues concerning the U.S. economy remain in complete uncertainty. How the new round of trade war escalation between China and the U.S. will end is unknown. Whether negotiations between Donald Trump and Xi Jinping will take place is unknown. How the Federal Reserve will act at upcoming meetings is unclear. When the government "shutdown" will end is unknown. The true state of the labor market and inflation in the U.S. remains a mystery. Based on all this, the market remains suspended in uncertainty and prefers to trade within a limited range rather than make rash moves. As a result, in recent months we have seen only alternating corrective structures.

General Conclusions

The wave picture for GBP/USD has changed. We are still dealing with an upward, impulsive section of the trend, but its internal wave structure has become more complex. Wave 4 is taking on a three-wave form, and its structure is several times longer than that of wave 2. The latest downward three-wave structure is presumably complete. If this is indeed the case, then the instrument's rise within the broader wave structure may continue, with initial targets around the 1.38 and 1.40 levels.

The larger-scale wave pattern looks nearly perfect, even though wave 4 went slightly above the top of wave 1. However, I should remind you that perfect wave patterns exist only in textbooks — in practice, everything is much more complicated. At the moment, I see no reason to consider alternative scenarios to the upward trend section.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often imply changes.
2. If you are not confident about what is happening in the market, it's better not to enter it.
3. There is never and can never be 100% certainty about market direction. Don't forget to use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.