06.04.202600:36 Forex Analysis & Reviews: British Pound. Weekly Preview

The British pound faces the same issues as the euro at the start of the new week. The wave analysis suggests the formation of an upward correction wave structure; however, geopolitical events may contribute to further declines in quotes. To be fair, the instrument could have continued its decline last Friday, when robust labor-market and unemployment data were released in the US. The data proved unexpectedly strong, which could have led to a sharp increase in demand for the US dollar. No one would have been surprised by another rise in the dollar's value. But it didn't happen. Will it be avoided on Monday?

In my view, the probability is 50/50. If Trump indeed launches a new missile strike on Iranian infrastructure, a response is inevitable, and a new rise in the dollar is unavoidable. The economic data (virtually none for the UK next week) will not change that. Therefore, the market remains in a position where economic news plays almost no role, while the geopolitical backdrop can break any wave analysis.

Based on everything mentioned above, the GBP/USD instrument's fate will again depend on geopolitics. Moreover, everything could be resolved in the coming hours, as Monday—April 6—Trump promised to "destroy Iran" on that date. It's unlikely that the US president will wait for Monday. A strike could be launched as early as Sunday night. However, let's not speculate, although that is all market participants have left to do. The market is closed, and no trader knows Trump's plans.

Wave Picture for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the instrument remains within an upward segment of the trend (lower image) and, in the short term, has completed the formation of a downward wave structure. Since the five-wave impulse structure is complete, my readers can expect price increases over the coming week with targets located around 1.1666 and 1.1745, corresponding to 38.2% and 50.0% on the Fibonacci scale. Further movements of the instrument depend entirely on events in the Middle East.

Wave Picture for GBP/USD:

The wave picture for the GBP/USD instrument has become clearer over time, as I anticipated. We now see a clear five-wave downward structure with an extension in the third wave on the charts. If this is indeed the case, and geopolitics does not provoke a new collapse of the instrument in the near future, we will see the formation of a minimum three-wave corrective structure, within which the pound could rise to the levels of 1.3429 and 1.3512, corresponding to 38.2% and 50.0% on the Fibonacci scale from the last downward wave set. Therefore, in my opinion, now is a good time to buy.

Key Principles Of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to work with and often entail changes.
2. If there is no confidence in what is happening in the market, it is better not to enter it.
3. There is no such thing as absolute certainty in market movement directions, and there never can be. Always remember to use protective stop-loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.