FX.co ★ Analysis of GBP/USD on May 17. UK prepares to lift quarantine

It seems that the wave pattern of the GBP/USD pair has cleared up. However, it still allows several possible scenarios at once. The minimums of the expected waves c and b are almost the same, so it is difficult to understand where exactly the construction of a new upward trend section began, which, depending on this, can take the form a-b-c or a-b-c-d-e. So far, I depend on the pattern of the form a-b-c-d-e, which is plotted on the chart above. If this markup is correct, then the increase in quotes and the construction of this wave structure could have already been completed. The exit of quotes from the reached highs in the last few days indirectly confirms this. Another thing is that the supposed wave e may actually be a wave c, and the entire upward wave structure may still be a five-wave one. In this case, we expect a wave down and another wave up to the level of 1.4243. Other types of wave pattern are also possible. In any case, a decline in quotes is expected. Otherwise, the wave pattern of the instrument may currently require making adjustments.

On Monday, there was practically no news background for the UK and the US, and on Friday, it was expressed by the same reports that was mentioned in the EUR/USD review. Therefore, the GBP/USD pair rose by 60 basis points or so on Friday and Monday. But news from the UK that another part of the quarantine restrictions was lifted as part of a four-stage plan to end the quarantine increased the demand for the pound. Starting on Monday (May 17), bars, theaters, cinemas, museums, restaurants and fitness centers will open in the UK. Britons are allowed to travel abroad, but only to certain countries that are allowed by the government, and also to gather in groups of more than 6 people. The full release from quarantine is scheduled for June 21.

However, health experts urge Boris Johnson not to rush to ease the quarantine, as there is a risk of a third wave of the pandemic. Doctors fear the spread of the Indian strain of coronavirus, which has recently terrorized several cities in the north-west of England. Thus, doctors believe that before easing the restrictions, it is necessary to have time to vaccinate as many people as possible. As the vaccination process is progressing rapidly in the UK, a few weeks can really play a big role. It will be possible to completely remove all restrictions when all or most of the population gets vaccinated. The Indian strain is considered by British scientists to be more contagious than the common coronavirus. However, according to the latest data, it is susceptible to existing vaccines. Thus, the question is only in the vaccination of UK residents.

The wave pattern continues to be very confusing, so it is suggested to wait for it to clear up. There are at least several options for wave pattern, each of which can be implemented in the coming weeks. Now, the construction of a downward wave is expected, but it is difficult to say what structure it will belong to.

The downward trend section, which started to form several months ago, is taking on a quite unclear form. It was mentioned above that several wave patterns options are possible at once. Unfortunately, different options offer different further developments. Therefore, it may be necessary to wait for some time for the current wave pattern to slightly clear up.