The wave pattern for GBP/USD remains ambiguous but still comprehensible. There is a high probability of forming a long-term downward trend, with the main uncertainty revolving around wave 2 in 1, which appears rather unconvincing. However, wave 5 looks well-formed, leading me to conclude that the major wave 1 has been completed. If this assumption is correct, a series of corrective waves is currently unfolding, with targets near the 1.26 and 1.28 levels. The first two waves in this structure appear complete, while the third wave may conclude at any moment.

Given that the euro is likely continuing its correction, a similar correction is expected for the pound. A key factor is the Bank of England's (BoE) plan to implement four rate cuts in 2025, whereas the Federal Reserve (Fed) is expected to lower rates by no more than 50 basis points. The UK economy has repeatedly disappointed market participants, while the stronger U.S. economy has reinforced confidence in the dollar. These factors should prevent large-scale dollar selling and pound buying in the near term.

GBP/USD remained virtually unchanged on Tuesday. Over the past few hours, there has been a slight increase in demand for the pound, but it has not significantly impacted the overall trend. Wave C in 2 may have been completed on Monday, as it appears structured and finalized.

If there were upcoming reports from the UK, expectations of strong data could drive further strengthening of the pound. However, no major UK economic releases are scheduled.

In the U.S., the economic calendar is also lackluster. For instance, tomorrow's new home sales report is set for release. While it holds some importance, the likelihood of it sparking significant market activity is low. Traders are interested in strong price movements that present clear trading opportunities, not minor fluctuations of 30 points.

Several BoE officials have already spoken this week, with more speeches expected. However, for the market to gain momentum, there needs to be significant and previously unknown information from UK policymakers—a relatively rare occurrence.

General Conclusions

The wave pattern suggests that the downward trend is still unfolding, with its first wave now complete. The current focus should be on forming a clear corrective structure, after which new sell opportunities can be identified. The minimum targets for this correction have been reached around 1.26, and a further 200-point drop is highly probable.

While unexpected news could provide support for the pound, no such developments are evident at the moment, so a further decline is the most likely scenario.

On a higher wave scale, the structure has shifted, now indicating a downtrend, as the previous three-wave upward movement appears complete. If this assumption holds, we should anticipate a corrective wave 2 or B, followed by an impulse wave 3 or C.

Key Principles of My Analysis:

1. Wave structures should be simple and clear – complex formations are difficult to trade and often lead to unexpected changes.
2. If market conditions are unclear, it is better to stay out rather than force a trade.
3. There is never 100% certainty in price direction – always use protective stop-loss orders.
4. Wave analysis can be combined with other methods, such as technical indicators and trading strategies, to strengthen the overall analysis.