FX.co ★ British Pound. Weekly Preview

The British currency approaches the new week in a much more positive mood than the European currency. Although a downward wave may begin to form in the GBP/USD instrument in the near term, the British pound has generally declined less than the euro, which is building a full five-wave downward structure. Over the past few weeks, the pound has gained about 200 basis points, fully retracing the recent decline after the Federal Reserve meeting. The outlook for the British pound is brighter than that for the euro.

Next week, there are no significant events scheduled in the UK. Similarly, there will be few in the U.S. Geopolitical tensions continue to ease, with a new round of negotiations between Iran and the U.S. set to begin on June 11. What, then, should market participants react to during the week? It is important to note that a lack of events does not mean a lack of movement. The market can move on technical or wave factors. Trader activity may be low, but movements can still occur.

The drivers will once again be the Fed and geopolitics. The new round of negotiations between Iran and the U.S. could fail, a ceasefire near the Strait of Hormuz may be violated, Israel may resume attacks on Hezbollah, conditions for one party to the conflict may change, Donald Trump may renew pressure on the Fed or initiate a new trade war/military conflict, and this list can go on indefinitely.

Based on all of the above, I believe a downward wave will begin to form shortly and is unlikely to be strong. However, depending on the news background, which is difficult to predict in advance, this wave could be either strong or weak.

Wave Picture for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the instrument remains within an upward segment of the trend, while in a more short-term perspective, it is within a downward segment of the trend. In my opinion, it is a good time to try to form long positions, but the instrument may drop to the 13th figure within wave 5 in C. However, wave analysis often brings surprises, so I would start adjusting towards buying now.

Wave Picture for GBP/USD:

The wave picture for the GBP/USD instrument has become quite complex. Currently, the instrument has formed three waves down, while EUR/USD could have 5 waves. Thus, the British pound may also build another wave down, similar to the euro, but this wave could be the second within a new upward segment of the trend. Therefore, there will be divergence in the wave markings of the euro and pound, but it will be insignificant. Based on this, I expect a downward pullback in the near term, which will be followed by the formation of a new upward segment of the trend, with initial targets around the 37-38 figures.

Key Principles of My Analysis:

1. Wave structures should be simple and understandable. Complex structures are difficult to play and often bring changes.
2. If there is no confidence in what is happening in the market, it is better not to enter.
3. There is never 100% certainty in the direction of movement. Always remember to use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.