Wave analysis of GBP/USD for August 3. How many BoA members will vote to cut the QE program?

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The wave counting for the Pound/Dollar instrument has become a little clearer. The instrument continues to build a new upward wave, which now looks very convincing and definitely does not fit into the wave counting of the previous downward trend section. I believe that the downward section of the trend is completed. Moreover, it took on an already five-wave appearance. Thus, now I expect the construction of at least three upward waves. If this assumption is correct, then the price increase will resume after the construction of a corrective downward wave, the beginning of which could have already been laid. However, at the moment, wave b does not look complete yet. The targets of the entire upward trend are located near the maximum of the wave e. Therefore, I expect the instrument to increase by another 200-250 points at least. Also, the first wave of a new upward trend segment looks completely different from any wave in the period of February 24-July 20. Thus, a new section of the trend has a good chance of becoming impulsive.

The Pound/Dollar instrument increased by 40-50 basis points on Tuesday. There was no news background during the day, so the markets were forced to trade blindly. Tomorrow, the Bank of England will complete its next meeting, and the markets will wait and demand information regarding changes in the parameters of monetary policy. The Bank of England is the latest in a series of the most important banks for us, which announce their meeting results. The Fed and the ECB have already said everything they wanted to tell the markets and there was little important information in their statements.

Therefore, the markets responded with a very sluggish reaction to these events. I can't say that there are more hopes for the Bank of England than for the Fed or the ECB. Some time ago, there was a feeling that it was the British one that would overtake the Fed in raising the rate or completing the economic assistance program. However, it does not seem so now, given the not very high growth rates of the British economy. In other words, the Bank of England has much more reasons not to change anything than to change something.

Analysts are all as one confident that the markets will not wait for any changes tomorrow, despite the fact that the Bank itself was recently forced to admit that the inflation rate exceeds its expectations. The National Institute of Economic and Social Research (NIESR) has published an inflation forecast in the UK for the end of 2021 – 3.9%. That is, almost twice as high as the target level of the Bank of England. Thus, if the MPC recognizes that inflation is a problem, then some of them may start voting for changing the quantitative easing program. This moment will be the main one tomorrow.

At this time, the wave pattern has become more understandable. The construction of the downward trend section is completed. I continue to count on the construction of a new upward trend section, so at this time it is possible to buy the instrument for each MACD signal "up" with targets located near the 1.4240 mark, which corresponds to 0.0% Fibonacci, for each MACD signal "up". The instrument could start building a correction wave 2 or b, but it should not greatly affect the wave count.

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The upward section of the trend, which began its construction a couple of months ago, has taken a rather ambiguous form and has already been completed. A new section of the trend can get an impulse form, its first wave has already acquired a sufficiently extended form and exceeded the peaks of waves b and d. The chances of a new strong increase in quotes are growing.

The material has been provided by InstaForex Company - www.instaforex.com

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