The wave pattern for GBP/USD continues to indicate the development of an upward impulsive trend. The wave pattern is almost identical to that of EUR/USD, as the main driver of the movement is the US dollar. Demand for the dollar is falling across the entire market spectrum, which is why many instruments are showing similar dynamics. Wave 2 of the upward trend has taken a single-wave form. Within the assumed wave 3, waves 1 and 2 have already formed. Therefore, we should now expect continued growth of the pound within wave 3 of 3, which is exactly what we are observing.

It's important to remember that, at this time, much in the currency market depends on Donald Trump's policies—not just his trade policy. Positive news may occasionally come from the US, but the market remains focused on the prevailing uncertainty, Trump's contradictory decisions, and the hostile, protectionist stance of the White House. Therefore, the dollar needs very strong support to convert even positive data into actual market demand. So far, it has failed to do so.

The GBP/USD pair rose by 30 basis points on Monday, but more significant changes may follow by the end of the day. The US trading session is traditionally more active. Monday was rather uneventful, even though there were ample reasons to continue selling the US dollar. Recall that on Friday, a new round of hostilities began between Iran and Israel. Initially, the market rushed to buy dollars to preserve capital, but within a few hours, those purchases stopped, as participants remembered who the current US president is and what kind of policy he follows. It turns out that any geopolitical conflict now seems to benefit the euro, the pound, and other currencies—basically, anything but the US dollar.

This week features not only the Fed meeting but also the Bank of England meeting. The BoE is expected to keep its interest rate unchanged. Let's draw a parallel with the previous meeting and follow the logic. A month and a half ago, the rate was cut, but the pound remained in demand. On Thursday, the BoE will leave the rate unchanged—this is a more hawkish move compared to the last meeting. Therefore, I would expect the pound to strengthen again.

First, because the British regulator never intended to cut rates at every meeting in 2025. Second, inflation has recently spiked to 3.5%, while less than a year ago it was only 1.7%. For this reason, the BoE will likely pause for longer than just one meeting. Consequently, the bank may carry out fewer easing rounds than previously expected. This gives the pound another source of demand.

Conclusions

The wave pattern for GBP/USD remains unchanged. We are seeing an upward, impulsive segment of the trend. With Donald Trump in office, the markets could experience more shocks and reversals that do not align with wave theory or any technical analysis. However, for now, the working scenario remains valid, and Trump continues to do everything that keeps demand for the dollar low. The targets for wave 3 are located around the 1.3708 mark, corresponding to 200.0% Fibonacci of the presumed global wave 2. Therefore, I continue to consider long positions, as the market is showing no signs of reversing the trend.

On the higher wave scale, the wave pattern has shifted. We can now assume the formation of a new upward trend segment, which does not yet appear complete. For now, further upward movement remains the expectation.

Core Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are hard to interpret and often lead to changes.
2. If you're unsure about market developments, it's better to stay out.
3. One can never have 100% certainty in price direction. Always use Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.