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GBP/USD analysis on June 6. Andrew Bailey warns of a food crisis and high inflation.


For the pound/dollar instrument, the wave markup continues to look very convincing and does not require adjustments. The downward section of the trend is completed, and the wave e-E, although it has taken a rather complex form, however, is also a five-wave in the structure of the five-wave downward section of the trend, as well as for the euro/dollar instrument. Thus, both instruments presumably completed the construction of downward trend sections. According to the British, the construction of an upward section of the trend has begun, which is currently interpreted by me as a corrective one. I believe that it will turn out to be three-wave, but there is also a second option, in which it will take a pulsed, five-wave form. Now, presumably, the construction of a corrective wave b is continuing, after which wave c will begin with targets located around the 30th figures Wave b can take a three-wave form, as with the euro/dollar instrument. I will note once again that the wave markings of the euro and the pound are very similar now, so we can expect that both currencies will move approximately the same in the next few weeks.

A few months ago, it was impossible to guess the current levels of inflation.

The exchange rate of the pound/dollar instrument increased by 55 basis points on June 6. This movement began after a decline on Friday when the market was increasing demand for the dollar due to strong statistics in the United States. However, these data are already in the past, and the tool has not yet completed the construction of the correction wave, since the last low has not been updated. Wave b can also take a simple, single-wave form. There was no news background on Monday, so the market did not have the information to make decisions that would clarify the wave picture a little. However, even if the decline continues, it should not be strong, otherwise, you will have to make adjustments to the wave markup.

Meanwhile, the governor of the Bank of England, Andrew Bailey, informed the Finance Committee in the UK Parliament about the problems that the British economy may face in the near future. According to Bailey, the country will face strong food inflation and a shortage of wheat and sunflower oil. He said that the problems related to Ukraine and the conflict with Russia continue to worsen. Bailey noted "external forces" that affect the cost of energy and the prices of many goods on world markets, and the growth of British wages is a consequence and increases the demand for goods that are in short supply. In his opinion, this state of affairs can lead to an even greater increase in inflation and to an increase in unemployment. The Governor of the Bank of England also noted that at this time it is not possible to export wheat from Ukraine, and Ukraine is one of its largest exporters. However, all of the listed concerns of Andrew Bailey relate not only to the UK and the pound. The problem of high inflation is widespread, and there may be a shortage of food in the European Union. The question is, are central banks willing to keep raising rates at a time when economic growth may be slowing down?

General conclusions.

The wave pattern of the pound/dollar instrument still assumes the completion of the construction of wave E and the entire downward trend segment. Thus, I now advise buying the British for each MACD signal "up" with targets located above the peak of wave a, not lower than the estimated mark of 1.3042, which corresponds to 76.4% Fibonacci. Under certain circumstances, wave marking can become very complicated, but there is no reason for this.analytics629e1a4726d9c.jpg

At the higher scale, the entire downward trend section looks fully equipped. Therefore, the continuation of the decline of the instrument below the 22nd figure is postponed indefinitely for the time being. Wave E has taken a five-wave form and looks quite complete. The construction of at least three waves ascending trend sections has begun.

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