The legend in the InstaSpot team!
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The British pound's exchange rate will also depend on geopolitics next week. On Monday, we may see significant market turmoil, as the Strait of Hormuz has been reopened for less than a day. The next round of negotiations between Iran and the U.S. is set to begin on Monday, while the two-week ceasefire may end on Wednesday. On Sunday, Donald Trump stated that if an agreement is not signed by Iran, he will order the destruction of all bridges and power plants.
Over the past two weeks, the market has remained optimistic, allowing the GBP/USD instrument to form a well-founded, logical upward corrective structure. However, at this point, the structure appears complete, and the geopolitical backdrop may worsen significantly next week. Hence, we have a negative backdrop, a completed corrective structure, and two failed attempts to break the 1.3594 mark, which corresponds to the 61.8% Fibonacci level.
However, it should be acknowledged that the broader economic backdrop can also influence the pound's exchange rate. Important reports on unemployment and wages will be released in the UK on Tuesday, followed by a significant March inflation report on Wednesday, key indices of business activity in the services and manufacturing sectors for April on Thursday, and retail sales on Friday. As we can see, there will be several reports in the UK, and the market may react to the most important ones. Undoubtedly, the inflation report is key, as it influences the Bank of England's monetary policy decisions. Additionally, the next BoE meeting is coming up very soon.
Based on the analysis of EUR/USD, I conclude that the instrument remains within an upward segment of the trend (see the lower picture) and, in the short term, is within a corrective structure. The corrective wave set looks quite complete and may take on a more complex, elongated form only if a stable and long-term ceasefire is established between Iran, the U.S., Israel, and ALL other countries in the Middle East. Otherwise, I believe that a new downward wave set may begin from the current positions. Or at least a corrective wave may develop.
The wave picture of the GBP/USD instrument has become clearer over time, as I had anticipated. Now we see a clear three-wave upward structure on the charts, which may already be coming to an end. If this is indeed the case, we can expect the formation of at least one downward wave (presumably a "d" wave). The upward segment of the trend could take on a five-wave form, but this will require the conflict in the Middle East to diminish rather than rekindle. Thus, the base scenario for the coming days is a decline into the 34-figure area or slightly lower. Everything will once again depend on geopolitical factors.
*Analiza tržišta koja se ovde nalazi namenjena je boljem razumevanju tržišta i ne pruža instrukcije za vršenje trgovanja.
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