The wave pattern for GBP/USD continues to indicate the formation of a bullish impulse wave structure. The wave configuration is almost identical to that of EUR/USD, as the U.S. dollar remains the sole driver of the current market trend. Demand for the dollar is weakening across the board, which is why many instruments are showing similar dynamics. Wave 2 of the upward trend segment has taken a single-wave form. The assumed wave 3 appears strong and complete, so I expect a corrective structure to develop, the first wave of which may already be complete.

It is important to remember that much in the currency market currently depends on Donald Trump's policies—not just trade-related ones. While some positive economic data occasionally emerge from the U.S., the market continues to be overshadowed by the uncertainty surrounding economic policy, conflicting decisions and statements by Trump, and the White House's hostile and protectionist stance. As a result, the dollar has to overcome considerable skepticism to convert even favorable news into increased market demand.

The GBP/USD rate rose by 50 basis points on Tuesday. Today, FOMC Chair Jerome Powell is scheduled to speak, and market participants may be hoping for useful insights. Paradoxically, however, the Federal Reserve's monetary policy is no longer a primary concern for most market participants. Throughout 2025, the Fed has been defending itself from political pressure by the U.S. president, maintaining interest rates at their current level—yet the dollar continues to decline. Therefore, the market is currently less focused on the Fed's actual policy settings or how they compare with those of the Bank of England or the ECB.

Let me emphasize that the key issue is not the Fed's or BoE's interest rate in isolation, but how the two rates compare to each other—similar to how relative economic growth is assessed. For example, if the British economy contracts by 3% annually, should the pound weaken? On the surface, yes—but what if the U.S. economy shrinks by 5% during the same period? In that case, demand for the pound may rise—specifically in its pair with the U.S. dollar.

The same logic applies to central bank rates. The Fed's rate remains "restrictive," which might normally support the dollar, especially if the BoE lowers its rate. However, in 2025, the spotlight has shifted to the global trade war, so the market is more focused on the outlook for the U.S. economy under Trump's trade policy than on monetary policy. Therefore, whatever Powell communicates to the markets may not have the expected effect.

The market is increasingly anxious about whether Powell will resign in the near future. Trump has brought out the heavy artillery, accusing Powell of unjustified spending on Federal Reserve headquarters renovations—a matter now under legal scrutiny. This could be a compelling reason for Powell to step down as Fed Chair. If he resigns before May 2026, it would be a highly negative signal for the dollar. Market participants would interpret it as the end of the Fed's independence.

Overall Conclusions

The wave pattern for GBP/USD remains unchanged. The pair continues to follow a bullish impulse trend segment. Under Donald Trump's administration, the markets may face many more shocks and reversals, which could significantly affect the wave structure. However, at this stage, the working scenario remains intact. The targets for the upward trend segment are now located around the 1.4017 level, which corresponds to 261.8% Fibonacci based on the presumed global wave 2. A corrective wave sequence is currently unfolding. According to classical wave theory, this correction should consist of three waves, although the market may complete it with just one.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex formations are difficult to interpret and often lead to structural changes.
2. If you're unsure about market conditions, it's better to stay out.
3. There is never 100% certainty about market direction. Always use Stop Loss protective orders.
4. Wave analysis can be combined with other forms of analysis and trading strategies.