For the GBP/USD pair, the wave analysis remains quite complicated. A successful attempt to break through the 50.0% Fibonacci level in April indicated that the market was ready to build a downward wave of 3 or C. If this wave really continues its construction, then the wave pattern will become much simpler and the threat of complication of the wave analysis will disappear. However, in recent weeks, the pair has remained the same, which again makes us doubt the readiness of the market for sales. A downward wave of 3 or c may well be very long, like all previous waves of the current, but still a downtrend section.

In the current situation, my readers can still count on building wave 3 or c, the targets of which are located below the low of wave 1 or a, the mark of 1.2035. Consequently, the British dollar should decrease by at least 600-700 more base points from current levels. With such a decrease, wave 3 or c will turn out to be relatively small, so I expect a much larger drop in quotes. It may take a lot of time to build the entire wave 3 or c. Wave 2 or b has been under construction for 5 months, and this is only a corrective wave. Building a pulse wave can take even longer.

Buyers don't give a single chance to the dollar

The exchange rate of the GBP/USD pair remained virtually unchanged during Monday and Tuesday. Yesterday, Ben Broadbent of the Bank of England said that the regulator may well move to a softer monetary policy this summer, and today, the head of the Bank of England, Andrew Bailey, is due to speak. Whether he confirms Broadbent's words depends on whether the Briton will continue his promotion, which, frankly, is puzzling.

Also, tomorrow morning, the most important UK inflation report for April will be released. It is already extremely difficult to understand what to expect from this report and the market's reaction to it. Inflation may slow down to 2.1%, so the forecast can be considered optimistic. The real value of the indicator is unlikely to be lower than it, but it may well be higher. How does the market interpret the higher value of inflation, provided that it will still decrease very much in April? Let me remind you that the latest report on American inflation caused a decrease in demand for the dollar, despite the slowdown in inflation in accordance with market expectations by only 0.1% year-on-year. I didn't expect to see the dollar fall back then. Therefore, nothing concrete should be expected from the report on British inflation either. The market reaction can be any. Buyers continue to dominate the market, although the Bank of England may come close to its first easing tomorrow. The situation remains ambiguous. The wave pattern can get even more confused.

General conclusions

The wave pattern of the GBP/USD pair still suggests a decline. At the moment, I am still considering selling the pair with targets located below 1.2039, as wave 3 or c has yet to be canceled. A successful attempt to break through the 1.2625 mark, which equates to 38.2% Fibonacci, from above will indicate the possible completion of an internal, corrective wave of 3 or c, which now looks like a classic three-wave.

At the higher wave scale, the wave pattern is even more eloquent. The downward correction section of the trend continues to build, and its second wave has acquired an extended appearance – by 76.4% of the first wave. An unsuccessful attempt to break through this mark could lead to the beginning of building 3 or c, but a corrective wave is currently being built.

The basic principles of my analysis:

1) Wave structures should be simple and understandable. Complex structures are difficult to play out; they often bring changes.

2) If you are not sure what is happening in the market, it is better to avoid entering it.

3) The direction of movement is not absolute, and it can never be. Do not forget about Stop-Loss protection orders.

4) Wave analysis can be combined with other types of analysis and trading strategies.