The wave pattern for the GBP/USD pair continues to indicate the formation of an upward impulsive wave structure. The wave picture closely resembles that of EUR/USD, as the sole "driver" behind recent movements remains the U.S. dollar. Demand for the dollar is declining across the broader market (in the medium term), which is why many instruments are showing nearly identical dynamics. Currently, a corrective wave sequence is forming within wave 4. If this assumption is correct, then the decline may already be complete, as the structure has taken on a classic, well-formed three-wave pattern.

It's important to remember that much in the currency market now depends on Donald Trump's policies—and not just trade-related ones. While occasionally decent news comes out of the U.S., the market continues to price in uncertainty about the economy, Trump's contradictory decisions and statements, and the hostile, protectionist stance of the White House. In the coming weeks, the market will have to decipher a puzzle made up of conflicting data on GDP, inflation, labor, new tariffs, and Trump's nuclear threats.

The GBP/USD rate rose slightly on Monday, and this week's news background will likely be too weak to expect high volatility. Essentially, only two events draw clear attention—the Bank of England meeting and the ISM Services PMI. I expect a weak reading from the ISM Services Index, though I may be wrong. If the figure comes in below market expectations (51.0–51.5), demand for the U.S. dollar will likely continue to decline. However, the Bank of England could also surprise me by cutting rates, as the market currently expects.

Personally, I see no reason to cut rates in early August. U.K. inflation has risen to 3.6% year-over-year, the highest level in nearly a year and a half. Based on this, the Bank of England cannot reasonably talk about inflation stabilization or progress toward the 2% target. Inflation is rising, and there's no denying that. The British regulator has already cut rates twice this year. A third rate cut would make little sense.

Since the market currently expects monetary easing, I fear that the BoE's August meeting might end with an unpleasant surprise. If no new round of easing is announced on Thursday, demand for the pound could surge, as the market is clearly cautious about buying the British currency. In my view, this week could be quite favorable for the pound. The wave pattern gives a high probability that wave 4 is complete. And Friday's news flow has flipped the entire market upside down. Based on this, I already see several reasons for renewed weakness in the U.S. dollar.

Conclusions

The wave pattern for GBP/USD remains intact. We are dealing with an upward impulsive section of the trend. Under Donald Trump, markets may face many more shocks and reversals that could significantly impact the wave structure, but for now, the current scenario holds its integrity. The targets for the upward trend section are now around the 1.4017 level. At this point, I assume that the formation of downward wave 4 is complete. Therefore, I expect the upward wave sequence to resume and continue to consider buying positions.

Core Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often shift.
2. If you're uncertain about what's happening in the market, it's better to stay out.
3. There is never 100% certainty in the direction of movement. Always use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.