Most currencies didn’t do well against the US dollar last year, but few did worse that the British pound. GBPUSD hovered at 1.3530 at the start of 2022. Alas, high inflation coupled with Liz Truss’ short-lived cabinet’s economic illiteracy pushed the pair to an all-time low of 1.0360. When things get so bad, there is usually a way out.
GBPUSD closed at 1.2100 the first week in 2023. Up 16.7% over its September low. The UK inflation appears to have hit a plateau while it is already falling in the Eurozone as well as the US. This bodes well to the pound. It is however difficult to base trading decisions upon macroeconomic factors. That’s why we prefer using Elliott Wave analysis.
Similar Elliott Wave setups can also be found in commodity, stock and crypto markets. The Elliott Wave Video Course will show you how to find them!
The 4-hour chart of GBPUSD reveals the structure of the pair’s recovery from 1.0360. It seems like a five-wave impulse pattern. Waves 1-through-4 have already been in place. Wave 2 is an extended running flat correction. Wave 3 is extended and its five sub-waves are labeled i-ii-iii-iv-v, where wave ‘v’ is an ending…