The British currency is also poised for further gains. We have seen the most ideal three-wave corrective structure possible. The key now is to ensure it does not evolve into a more complex formation that would require changing the trading plan. It is worth recalling that corrective structures can sometimes take a five-wave or even more extended form. This usually happens when a corrective move unexpectedly starts receiving support from the news backdrop. In other words, if the dollar were suddenly supported by news now, we could see several more waves in its favor, making the structure more complex.

However, the U.S. dollar currently has virtually no support. For a time, market participants counted on strong economic growth, no budgetary issues, and favorable deals signed by Donald Trump — and they got all of that. But unfortunately for the American currency, the positives came with negatives. The labor market is "cooling," high tariffs are reducing import volumes, Trump has signed several trade deals but not one with China, and many countries remain in a state of uncertainty.

In addition, Trump continues to impose tariffs for a second round, using any formal pretext. Trump punishes any perceived injustice in the world for the benefit of the U.S. But the dollar has not been a beneficiary of such trade policy and likely will not be.

In the UK next week, reports will be released on unemployment, wages, changes in claimant count, Q2 GDP, and industrial production. All these figures are of interest to traders, but it should be noted that last week the Bank of England cut interest rates for the third time this year, and yet demand for the pound overall continued to rise. In my view, this indicates that the market is set on building a new impulse wave, and the wave counts for EUR/USD and GBP/USD are now almost identical.

Based on all of the above, I believe the U.S. news backdrop will be the main driver for the market — and not economic reports.

Wave Pattern for EUR/USD:

Based on the EUR/USD analysis, I conclude that the instrument continues building an upward section of the trend. The wave count still entirely depends on the news backdrop related to Trump's decisions and U.S. foreign policy. The targets for this trend section may extend up to the 1.25 area. Therefore, I continue to consider buying with targets around 1.1875, which corresponds to 161.8% Fibonacci, and higher. I assume that the construction of wave 4 has been completed. Accordingly, now is a good time to buy.

Wave Pattern for GBP/USD:

The wave pattern for GBP/USD remains unchanged. We are dealing with an upward, impulsive section of the trend. Under Donald Trump, markets may still face numerous shocks and reversals that could significantly affect the wave structure, but for now, the working scenario remains intact. The targets for the upward section are now located near 1.4017. At present, I assume that the construction of the downward wave 4 has been completed. Therefore, I expect the upward wave set to continue and consider buying with a target of 1.4017.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often change.
2. If there is no confidence in what is happening in the market, it is better to stay out.
3. One can never have 100% certainty in the market's direction. Always use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.