The wave pattern for GBP/USD continues to indicate the formation of an upward trend segment (see lower chart). However, in recent weeks it has taken on a complex and ambiguous shape (see upper chart).

The pound has fallen too sharply, which makes the trend segment beginning on July 1 look uncertain. This section can be viewed as wave 4 — or even as a global corrective wave, since it exhibits a corrective rather than impulsive internal structure. The same applies to its sub-waves. Therefore, despite the prolonged correction, I believe the upward trend remains intact.

The downward wave pattern that began on September 17 has taken the form of a five-wave structure a–b–c–d–e and may now be complete. If that is indeed the case, the instrument is currently at the very beginning of forming a new upward wave sequence.

At present, much in the currency market depends on Donald Trump's policies. The news background remains highly unfavorable for the dollar. The fact that the market has recently ignored many significant factors is frustrating, since instead of a logical continuation of the upward trend, we have been witnessing a series of complex corrective structures for several months in a row.

The GBP/USD rate dropped by 50 basis points on Wednesday, which is somewhat surprising. No U.S. data were released today, no U.K. data were published either, and even Chancellor Rachel Reeves refrained from promising tax increases or discussing budgetary difficulties for the next fiscal year. Yet, demand for the British pound continues to decline.

This latest fall in the pound can be explained fairly easily — but the very need to explain every new drop is the problem. If the fall were expected, economists would have forecasted it. Instead, we are forced to rationalize it after the fact.

Yesterday, Britain's unemployment report was released, and it proved deeply disappointing: the unemployment rate jumped to 5%. On the one hand, this isn't surprising — the Bank of England recently indicated it expected the figure to rise to 5.1%. On the other hand, unemployment is growing faster than the BoE anticipated. In any case, that report came yesterday, not today.

The outlook for the pound remains unfavorable toward the end of 2025, as the Bank of England is likely to implement another round of monetary easing. However, the Federal Reserve is also expected to cut interest rates again, meaning that, in this respect, there is parity between the dollar and the pound. Unfortunately, the market currently shows little appetite for the British currency.

General Conclusions

The wave pattern of GBP/USD has evolved. We are still dealing with an upward, impulsive trend segment, but its internal structure has become more complex. Wave 4 has taken the form of a three-wave correction, which appears long and extended. The corrective structure a–b–c–d–e within wave c of 4 is likely nearing completion.

I expect the main wave structure to resume its upward development, with initial targets around the 1.38 and 1.40 levels.

The larger-scale wave structure looks almost ideal, even though wave 4 slightly overlaps the peak of wave 1. But let's remember — perfect wave structures exist only in textbooks; in real markets, things are far more complex. At the moment, I see no reason to consider alternative scenarios to the ongoing upward trend.

Core Principles of My Analysis

1. Wave structures should be simple and clear. Complex ones are hard to trade and often require adjustments.
2. If there is no confidence in what's happening in the market, it's better to stay out.
3. There is never 100% certainty about the direction of movement — always use Stop Loss orders.
4. Wave analysis can be combined with other analytical methods and trading strategies for greater reliability.