07.04.202519:22 Forex Analysis & Reviews: GBP/USD Analysis – April 7th

The wave structure of GBP/USD has also shifted toward a bullish, impulsive formation—"thanks" to Donald Trump. The wave pattern is nearly identical to that of EUR/USD. Up until February 28, we observed the development of a convincing corrective structure that raised no concerns. However, demand for the U.S. dollar then began to fall rapidly, ultimately forming a five-wave upward structure. Therefore, in the near term, we can expect the construction of three or five corrective waves, followed by wave 3 of a new global bullish trend.

Considering the fact that the news background from the UK had no influence on the pound's strong rally, we can conclude that Donald Trump alone is driving currency rates. If (theoretically) Trump's trade policy course changes, then the trend may change as well—this time to bearish. So, over the coming months (or even years), we should closely monitor all actions coming from the White House.

On Monday, the GBP/USD pair dropped 80 basis points from Friday's closing level. Frankly, it's not entirely clear why demand for the U.S. dollar suddenly surged, but there's a lot of confusion in the markets right now. Markets are collapsing, capital flows are being redirected and redistributed. Since the dollar's exchange rate depends on other markets, I wouldn't conclude that a new bullish trend has begun for the dollar. As I stated in previous reviews, a corrective downward phase should begin. While the current decline doesn't resemble a typical correction, the pair is indeed falling—so it's moving according to the new plan.

Unfortunately, making forecasts for a month or more ahead while Trump is president is a thankless task. Trump is sowing fear, panic, and chaos in the markets, so expecting textbook-like market behavior right now is unrealistic. The UK doesn't want a trade war with the U.S.—it wants a deal. Perhaps the reason for the dollar's sharp rise lies in that? The UK government stated that businesses and consumers will be protected. Prime Minister Keir Starmer promised that Britain will continue to uphold the principles of fair trade—but made no mention of retaliatory tariffs or measures against Washington. Support is good, but who knows what other tariffs Trump may impose even on close U.S. allies like the UK? We've already seen that "proximity" and "friendship" mean nothing to the U.S. president—Mexico and Canada were among the first to face tariffs. Let's see how long Britain and its prime minister can remain silent and "support businesses and consumers."

General Conclusions

The wave pattern of GBP/USD has shifted. We are now dealing with a bullish, impulsive trend segment. Unfortunately, with Donald Trump in the picture, markets may continue to experience a great deal of volatility and reversals that defy wave counts and all forms of technical analysis. Thus, for now, we should expect a corrective set of waves, the scale of which will depend on Trump—specifically, how soon new tariffs are introduced. After that, we may see the development of bullish wave 3, but only if Trump's stance on trade policy doesn't make a 180-degree turn.

In the higher time frame, the wave pattern has also transformed. We can now assume a bullish trend segment is unfolding. The nearest targets are 1.2782 and 1.2650.

My Key Analysis Principles:

1. Wave structures should be simple and clear. Complex structures are harder to trade and often lead to revisions.
2. If you're uncertain about what's happening in the market, it's better to stay out.
3. There is no such thing as 100% certainty in the market's direction. Always use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.