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16.06.2025 12:38 AM
British Pound: Weekly Preview
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The UK will have at least one report that deserves attention. On Wednesday, the May inflation report will be released. According to market expectations, inflation will slow to 3.4% year-over-year. Core inflation should ease to 3.7%. However, it's worth recalling that the previous consumer price report showed a sharp acceleration from 2.6% to 3.5%. Therefore, the market will not perceive a future slowdown of just 0.1% as a positive dynamic.

Inflation in the UK is once again accelerating. In September of last year, it stood at 1.7%; now it's twice as high. Clearly, under such conditions, the Bank of England is unlikely to continue easing monetary policy in the near future. At the latest MPC meeting, a second rate cut for 2025 was decided, which can already be considered a relatively dovish development. However, further rate cuts may accelerate inflation even more, and the market currently places higher priority on entirely different factors.

Demand for the British currency has been consistently growing throughout 2025. As a result, monetary policy and inflation in the UK are currently just as important to the markets as similar indicators in the Eurozone. Regardless of central bank actions, the euro and the pound continue to rise in value.

Undoubtedly, the problem lies not in these currencies but in the U.S. dollar. I've already listed the reasons why the dollar may continue to decline and the factors that matter to market participants. Based on that, I find it difficult to expect any support from U.S. policy or geopolitics for the American currency. Both instruments (EUR and GBP) show only one clear intent—to continue rising as long as Donald Trump sustains the trend. And Trump has no intention of reversing his course. The de-escalation of the Global Trade War exists only on paper; the "fairest courts in the world" could not cancel tariffs, not a single war has been ended by Trump, there is no nuclear deal with Iran, and protests against Trump's actions in America continue.

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Wave Analysis for EUR/USD:

Based on my EUR/USD analysis, I conclude that the pair continues building a bullish trend segment. The wave count depends entirely on the news flow related to Trump's decisions and U.S. foreign policy. The targets for wave 3 could extend as far as the 1.25 area. Accordingly, I am considering long positions with targets around 1.1708, corresponding to the 127.2% Fibonacci level and higher. A de-escalation in the trade war could reverse the bullish trend downward, but currently, there are no signs of reversal or de-escalation.

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Wave Analysis for GBP/USD:

The wave pattern for GBP/USD remains unchanged. We are dealing with a bullish, impulsive trend segment. Under Trump, the markets could face many more shocks and reversals that do not align with any wave structure or technical analysis. However, the working scenario remains valid for now, and Trump continues to take actions that only reduce demand for the U.S. dollar. The targets for wave 3 are around the 1.3708 mark, corresponding to the 200.0% Fibonacci extension of the presumed global wave 2. Therefore, I continue to consider long positions, as the market has shown no willingness to reverse the trend yet.

Key Principles of My Analysis:

  1. Wave structures should be simple and understandable. Complex structures are hard to trade and often lead to changes.
  2. If there's no confidence in the market situation, it's better to stay out.
  3. Absolute certainty in price direction doesn't exist and never will. Don't forget your Stop Loss orders.
  4. Wave analysis can be combined with other types of analysis and trading strategies.
Chin Zhao,
Analytical expert of InstaForex
© 2007-2025
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