GBP/USD Elliott Wave: Medium Term Top

Executive Summary

• GBPUSD completed wave ((i)) of a larger bullish impulse sequence.
• Current decline is viewed as wave ((ii)) and may reach 1.31 and possibly 1.27.
• Current forecast for additional declines holds while prices remain below 1.3632.

Cable’s decline from the June 12 high has come to an abrupt halt. The escalation of the Israel-Iran conflict caused many market participants to fear a flight towards safety on this week’s trading.

GBP/USD did gap down on the Asian opening this week and prices have rallied to meet the underside of the diagonal trendline. I suspect this trend line may hold down prices and another leg downtrend may push towards 1.3139.

GBPUSD Elliott Wave Count

The current Elliott wave count is that GBPUSD is declining in wave (a) of a larger (a)-(b)-(c) correction. This downtrend is anticipated to reach 1.3139 and possibly as low as 1.27. 

This downward correction would consolidate the rally from January to June 2025. The rally needed 5 months to unfold, so this decline may need 2-8 months to consolidate.

There is a rally impulse pattern that completed at the June 12 high. Wave (v) of the impulse was an ending diagonal pattern, shaped like a rising wedge.

When an ending diagonal pattern appears, oftentimes there is a quick retracement back to the origination of the diagonal. In this case, the forecast is for a swift retracement back to 1.3139 and possibly lower levels.

If lower levels are sought after, there is a support trend line developed from 2014 that passes through near 1.27. Also, in the same area is the 61.8% Fibonacci retracement level.

Bottom Line

GBPUSD has progressed through the first wave of a larger degree wave 3. The inability to break above 1.3631 opens the door for the bearish count and lower levels down to 1.27-1.31.

This decline is viewed as a larger degree wave ((ii)). Once lower price levels are established, then the prospects for a large and booming rally likely increase later on in 2025.

You might also be interested in: