The wave pattern for GBP/USD continues to indicate the formation of a bullish impulse wave structure. The wave pattern is almost identical to that of EUR/USD, as the only real driver remains the U.S. dollar. Demand for the dollar is falling across the board, which is why many instruments are displaying similar dynamics. Wave 2 of the upward trend segment took the form of a single wave. The presumed Wave 3 looks solid and complete, so I now expect a corrective structure to form—its first wave may already be finished. The anticipated Wave 4 may also take the form of a single wave.

It is important to remember that much of what is currently happening in the currency market depends on Donald Trump's policies—not just trade-related ones. Occasionally, positive news does come out of the U.S., but the market remains overshadowed by economic uncertainty, Trump's contradictory decisions and statements, and the White House's hostile and protectionist international stance. As a result, the dollar has to work much harder to convert even positive news into increased demand.

On Monday, the GBP/USD rate declined slightly, which supports my assumptions about the true causes of the euro's decline. To recap, there are three key reasons, each significant: a failed deal for the EU, de-escalation of the trade war, and the wave structure.

As for the British pound, the absurd EU trade deal—which hardly deserves to be called a "trade deal"—is irrelevant. A trade deal, or any agreement for that matter, implies mutual concessions, commitments, and terms for both sides. In the trade agreement between Washington and Brussels, obligations rest entirely on the EU, while Washington simply gets to reap the rewards. It is no surprise that the euro plummeted on Monday.

However, demand for the British currency also declined slightly despite the absence of any news background. In my view, this is also a very telling development. If Trump signed one of the most anticipated and significant agreements, why didn't demand for the dollar increase? Last week, the market also ignored the deal with Japan—which is likewise highly favorable to the U.S. So we now have two major trade deals beneficial to America, and still the market is in no rush to buy dollars. Why?

I believe that agreements reached under pressure do not inspire confidence among financial market participants. Trump has signed several major deals and is likely to conclude more under similar conditions. However, there is a growing perception that the current U.S. administration introduces a level of uncertainty that many prefer to avoid. As a result, where the use of the U.S. dollar is not essential, alternatives are increasingly being considered. The dollar, once seen as the most stable and trusted currency, is now viewed with more caution.

General Conclusions

The wave pattern of the GBP/USD instrument remains unchanged. We are dealing with a bullish impulse segment of the trend. Under Donald Trump, markets may face numerous shocks and reversals that could significantly alter the wave picture. However, for now, the working scenario remains intact.

The targets of the bullish trend segment are now located around 1.4017, which corresponds to 261.8% Fibonacci of the presumed global Wave 2. Currently, the formation of a corrective wave set within Wave 4 is ongoing. According to classical theory, it should consist of three waves.

My Key Analytical Principles:

1. Wave structures should be simple and easy to understand. Complex structures are difficult to trade and are prone to change.
2. If you're unsure about market conditions, it's better to stay out.
3. There is never 100% certainty in market direction. Always use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.