The wave pattern for GBP/USD continues to indicate the formation of a bullish impulse wave pattern. The wave configuration is almost identical to that of EUR/USD, since the U.S. dollar remains the main driver. Demand for the dollar is falling across the board, so many instruments are displaying similar behavior. Wave 2 of the upward trend has taken the form of a single wave. The presumed wave 3 appears convincing and complete, so I now expect the formation of a corrective structure.

It is important to remember that the current situation in the currency market is heavily influenced by Donald Trump's policies—not only trade-related ones. While some decent reports do come out of the U.S. from time to time, the market remains fixated on the broader uncertainty in the economy, Trump's contradictory decisions and statements, and the hostile, protectionist stance of the White House. As a result, the dollar must work much harder to translate even positive news into increased demand in the market.

The GBP/USD pair remained virtually unchanged on Wednesday, despite the release of noteworthy reports. Earlier in the day, the U.K. published its inflation report, which turned out to be even more interesting and important than the comparable U.S. report released a day earlier. As a reminder, the U.S. Consumer Price Index (CPI) rose to 2.7%, which was in line with market expectations. Thus, the 0.3% year-on-year increase came as no surprise. The very fact that inflation is rising supports the dollar, but rising British inflation should also support the pound.

British inflation increased by 0.2% to 3.6% year-on-year. However, the market had expected it to remain at the previous month's level. Therefore, expectations were exceeded, and the inflation uptick means that the Bank of England, like the FOMC, is unlikely to cut interest rates at its next meeting. Since inflation in the U.K. is not just rising but nearing the 4% mark—double the BoE's target—I believe that monetary policy easing in Britain will not occur until the figure falls below 3%. This is once again very positive for the pound.

Since the market has only priced in the U.S. inflation data, I tend to believe that the corrective wave pattern is still being formed, and the market is currently more inclined to sell than to buy, regardless of the news background. As a result, the instrument may continue to decline even amid a new escalation of the trade war or weak U.S. statistics. Between April 3 and 7, the pound fell by 500 basis points despite the absence of suitable news. It then quickly surged by 700 points and resumed forming the bullish wave pattern. Therefore, the current decline does not appear logical or well-founded to me.

General Conclusions

The wave pattern of GBP/USD remains unchanged. We are dealing with a bullish impulse segment of the trend. Under Donald Trump, markets may face many more shocks and reversals that could significantly affect the wave configuration, but for now, the working scenario remains intact. The targets of the bullish trend segment are now around 1.4017, which corresponds to 261.8% Fibonacci of the presumed global wave 2. A corrective wave pattern is currently being formed, which, according to classical theory, should consist of three waves.

Core Principles of My Analysis:

1. Wave structures should be simple and clear. Complex patterns are hard to trade and frequently change.
2. If you're unsure of what's happening in the market, it's better not to enter it.
3. There is never 100% certainty about market direction. Always use protective Stop Loss orders.
4. Wave analysis can be combined with other forms of analysis and trading strategies.