close icon

GBPUSD, Time to Hold Your Horses

Ever since it fell to as low as 1.2774 on August 24th, GBPUSD has been steadily rising. Today, the pair climbed as high as 1.3353 after it became clear that the Bank of England was getting ready for a rate hike later this year. The long-term economic logic behind the Pound’s jump is clear. Higher rates make credit, or money, more expensive, thus increasing the value of the currency. In the short-term, on the other hand, we believe traders might fall into a bull trap right now. The Elliott Wave analysis of GBPUSD below explains why.
gbpusd elliott wave analysis september 14th
The 3-hour price chart of the British Pound against the U.S. Dollar shows that the pair has drawn a complete five-wave impulse from the low at 1.2774. This pattern indicates an uptrend in progress. However, we should not expect more strength right away, because the theory states that a three-wave correction follows every impulse. If this count is correct, today’s rally should be short-lived. The upcoming decline is supposed to drag GBPUSD down to the support area of wave 4 of the impulse. In terms of price, this means a drop to at least 1.3150 from current levels. The negative scenario is further supported by the relative strength index, which reveals a bearish divergence between waves 5 and 3.

The news from the Bank of England might be good for the bulls in the long-term, but in the short-run the bears seem to have something else in mind. A decline of roughly 200 pips is likely.



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

EURUSD Up 420 Pips in a Month as Uptrend Resumes

The inevitable seems to be happening to the U.S. dollar. After record-breaking liquidity injections by the Fed in response to the COVID-19 crisis, the greenback is weakening across the board. The U.S. dollar has recently been declining against its major rivals, including the Yen, the pound and the euro. EURUSD, the most traded Forex pair…

Read More »

GBPJPY Bears Aiming at 120, Before Giving Up

Whether it is because of Brexit or not, GBPJPY has been trading below 160.00 ever since the referendum in June 2016. The pair has been locked in a wide range between 156 and 124 for four years now. Last week, it closed the session at 134.66, down from 138.84 at the open. In order to…

Read More »

Elliott Wave Setup Helps EURUSD Add 325 Pips

EURUSD has been under pressure for over two years now. The pair reached 1.2556 in February 2018, but has been making lower lows and lower highs ever since. Yet, the past couple of weeks painted a different picture. Between May 18th and May 29th, the euro surged 325 pips against the U.S. dollar. In those…

Read More »

EURGBP Pattern Signals Bullish Reversal Ahead

EURGBP has been in free fall since March 19th, when it rose to 0.9500. A month and a half later now, the pair is hovering below 0.8730, down 8% from the peak. Is the downtrend going to continue or should we expect a change of direction? That is the question we hope to answer in…

Read More »

GBPUSD Aiming at 1.30, but May Tumble to 1.21 First

Not long ago, we shared our long-term view of GBPUSD. In our opinion, the down-phase of the pair’s cycle, which is in its 13th year now, is almost over. One last dip to 1.1000 is likely to be followed by a major bearish reversal and the start of the next up-phase. Now, we are going…

Read More »

British Pound ‘s 13-Year Downtrend Almost Over

The thirteen-year period between 2007 and 2020 started with the biggest crisis since the Great Depression and is about to end with the biggest crisis since the Great Depression. Between the two, the longest economic expansion on record took place. And while stock markets around the world reflected that recovery, some currencies have been in…

Read More »

Ahead of the Move: EURUSD Adds 500 Pips in a Week

At the start of last week EURUSD was trading below 1.0700. The pair had fallen from as high as 1.1496 in just two weeks as coronavirus cases in Western Europe kept climbing disturbingly fast. And while fundamental traders had every reason to expect more weakness, the charts were sending a different message. The Elliott Wave…

Read More »

More analyses