wave structure, largely driven by Donald Trump. The wave setup is nearly identical to that of EUR/USD. Until February 28, we observed the formation of a convincing corrective structure that raised no concerns. However, demand for the U.S. dollar then started to fall rapidly. This ultimately led to the development of a five-wave bullish structure. Wave 2 took the form of a single wave and is now complete. Therefore, we should expect a continuation of the pound's rise within wave 3—which we have already been observing for three weeks.

It's important to remember that much of the current currency market depends on Donald Trump's policies. Even if positive news occasionally comes out of the U.S., the market remains focused on economic uncertainty, Trump's contradictory decisions, and the White House's antagonistic stance toward many nations. As a result, the dollar must work extra hard to convert even good news into increased market demand.

On Wednesday, the GBP/USD pair rose by 20 basis points, but from last night into this morning, the pound gained 125 points. A subsequent pullback followed, but this does not mean the pound has finished its upward climb. The instrument has quietly returned to the peak of the presumed wave 1 of future wave 3, and at the moment, I see no clear driver that could sharply boost demand for the U.S. dollar and end this bullish phase.

There were hopes that Trump's aggressive trade policies would last only a few months, followed by trade deals, changes in global trade dynamics, and tax cuts for Americans (at least offsetting higher costs from imported goods). Each day brings more negative headlines from the U.S.—and when none arrive, news from "friendly nations" steps in to deliver another blow to the dollar.

This morning, the UK's April inflation report was released. Market participants expected, based on Andrew Bailey's guidance, that inflation would rise to 3.3% from March's 2.6%. In reality, the figure jumped to 3.5%, and core inflation is now 3.8%. Essentially, the Bank of England may have to start over, as core inflation is now nearly double the target. The two rounds of easing implemented earlier this year may end up being the only ones. The British regulator clearly prioritizes the state of the economy and will likely remain cautious in cutting rates. The UK economy has shown sluggish growth for years, so it's important not to undermine it through policy missteps. At the same time, until inflation starts returning to March levels, I don't expect another round of rate cuts.

Conclusions

The wave pattern for GBP/USD has transformed. We are now dealing with a bullish, impulsive segment of the trend. Unfortunately, under Donald Trump, markets may face numerous shocks and trend reversals that defy wave structures and any form of technical analysis. Wave 3 is still forming, with near-term targets at 1.3541 and 1.3714. Therefore, I continue to consider long positions, as the market has not shown any intent to reverse the trend again.

On the higher wave scale, the structure has also turned bullish. We can now expect the formation of an upward trend segment that, at this point, does not yet appear complete. For now, further gains remain likely.

Core Principles of My Analysis:

1. Wave structures should be simple and clear. Complex formations are harder to trade and often result in changes.
2. If you are unsure about market conditions, it's better not to enter.
3. Absolute certainty about market direction does not exist. Always use protective Stop-Loss orders.
4. Wave analysis can be combined with other forms of analysis and trading strategies.