Forex Analysis & Reviews: 26.01.2023 - GBP/USD. Analysis for...

26.01.2023 01:34 PM

GBP/USD. Analysis for January 26. US GDP report may support the dollar

The wave markup for the pound/dollar instrument currently appears rather complex, but it also doesn't call for any explanations and starts to diverge dramatically from the markup of the euro/dollar instrument. Our five-wave rising trend segment has the form a-b-c-d-e and is most likely already finished. I anticipate that the construction of the downward phase of the trend has already started. This section will at least have three waves, but wave b ended up being too long because of the recent spike in the instrument's quotes. The present upward wave will no longer be regarded as wave b if the price increase persists, and the markup for the entire wave will need to be adjusted. However, I still anticipate constructing a falling wave c, and if the wave markup is still accurate, the instrument might decline by 500–600 basis points. Wave e's peak does not surpass that of the anticipated wave b.

The cost of the British pound has once again increased.

On Wednesday, the pound/dollar exchange rate increased by 70 basis points. There was nothing to draw attention to while looking at the economic calendar because the news landscape yesterday was bare. The instrument returned to the apex of the anticipated wave b, though, when the market started to pick up purchases again during the day. The wave layout as a whole is about to change, and this wave is currently about to be canceled. The entire upward portion of the trend will again get more challenging after another 50-100 points up. Unfortunately, the demand for UK money is not declining, which makes using the instrument extremely difficult. As I've already mentioned, one drawback of wave research is that wave structures tend to complicate over time and can do so as often as wanted within a trend area. It appears that we are currently facing a similar issue.

Today, the US will deliver a significant report on the fourth quarter's economic growth. After expanding by 3.2% in the third quarter, the market anticipates that the economy will expand by 2.6% during this time. On the one hand, this is a slowdown in economic growth. On the other hand, who forecasts the rate of economic growth when a recession is imminent? The economy is not contracting as it did in the first two fantastic quarters of last year. The likelihood of the dollar gaining at least slightly increases with the level of today's report. If the Fed does decide to raise rates by 50 basis points next week, it will be because the economy is doing well. The market was instantly reassured by the December inflation report's sixth consecutive reduction that the regulator was prepared to drop the "hard" approach to rates. Let me remind you of this. The likelihood of a rate hike of just 25 basis points will increase to almost 100% if the economy expands by less than 2.6%, and the demand for US currency may fall even further.

Conclusions in general

The building of a downward trend section is still assumed by the wave pattern of the pound/dollar instrument. According to the "down" reversals of the MACD indicator, it is possible to take into account sales with objectives around the level of 1.1508, which corresponds to 50.0% by Fibonacci. The upward portion of the trend is probably over; however, it might yet take a longer form than it does right now. However, you must exercise caution while making sales because the pound has a significant tendency to rise.

The image is comparable to the euro/dollar instrument at the higher wave scale, but distinctions still start to show. Currently, the upward correction portion of the trend is almost finished. If this presumption is true, then we must wait for the development of a downward section to continue for at least three waves with the possibility of a decrease in the region of figure 15.

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*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.