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11.09.202416:27 Forex Analysis & Reviews: Analysis for GBP/USD on September 11. Demand for the British Pound Continues to Decline.

Exchange Rates 11.09.2024 analysis

The wave pattern for GBP/USD remains quite complex and highly ambiguous. For a while, the wave picture looked convincing and suggested the formation of a downward wave set with targets below the 1.2300 level. However, in practice, demand for the U.S. dollar increased too significantly for this scenario to play out, and it continues to grow.

Currently, the wave pattern has become very complex. I should remind you that I prefer to use simple wave structures in my analysis, as complex ones often involve too many nuances and ambiguous moments. We recently saw another upward wave, which caused the pair to break out of the triangle. The current upward wave structure, which likely began on April 22, could extend further, as the market seems unlikely to settle until it fully digests the impact of the Fed's rate cuts. A three-wave corrective structure is now emerging, and the recent successful break of the 1.3142 level (equivalent to 100.0% Fibonacci) suggests the market is ready for at least a minor decline.

Sellers are struggling but remain resilient. The GBP/USD rate decreased slightly on Wednesday, which is a small drop. However, I should point out that this decline might not have occurred at all since the U.S. Consumer Price Index (CPI) came in weaker than the market expected. Inflation in August fell to 2.5%, while core inflation remained at 3.2%. In my view, the difference between 2.6% and 2.5% is minimal. However, the market has repeatedly responded by selling the dollar when inflation slows.

Despite this, demand for the U.S. dollar is still growing, which is good news because I expect the pair to continue declining. The five-wave upward structure has completed. Now, we should expect at least three corrective waves. Given the recent U.S. statistics, this seemed unlikely, but the situation is now clearly shifting in favor of the U.S. dollar.

It's worth noting that while the UK statistics yesterday were positive, today's figures were disappointing. Industrial production in the UK fell by 0.8% month-on-month, and GDP in July showed no growth, not even by 0.1%. The market had expected much stronger figures. In my view, the U.S. dollar will continue to strengthen, as I don't see any other path forward. The pound has been rising for too long, and the market has been pricing in the Fed's monetary easing for too long. Now, it seems more logical to take profits on trades opened at the start of the year.

Exchange Rates 11.09.2024 analysis

General conclusions.

The wave pattern for GBP/USD still suggests a decline. If the upward section of the trend began on April 22, it has already formed a five-wave structure. Therefore, at the very least, we should now expect a three-wave correction. In my opinion, sales of the pair with targets around the 1.2627 level should be considered. However, sellers have already failed to hold the 1.3142 level once, and the upward wave structure could become endlessly complex with the current news background. Nonetheless, I expect a correction.

On a larger wave scale, the wave pattern has evolved. We can now assume the formation of a complex and extended upward corrective structure. At the moment, this is a three-wave structure, but it could develop into a five-wave structure, which could take several months or more to complete.

Key principles of my analysis:

  1. Wave structures should be simple and understandable. Complex structures are difficult to trade and often lead to changes.
  2. If you're unsure about what's happening in the market, it's better to stay out.
  3. Absolute certainty in the direction of movement is impossible. Always use protective Stop Loss orders.
  4. Wave analysis can be combined with other types of analysis and trading strategies.

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