GBP/USD Vulnerable To Brexit Narratives

We see a textbook impulse within the GBPUSD wave structure. It occurred from the April 2018 top to the end of May 2018. Wave action since early-June does not fit to the character of the previous drop. It is most likely a complex sideways correction, which we interpret as minute wave ii(circle). All of this action occurred within the darker grey trend channel to the downside. We label the last breakout attempt of the trend channel as the very end of minute wave ii(circle). It is decomposed as a zig-zag / zig-zag / triangle double-three combination. Weakness during the month of August is most likely the resolution of that correction already.

We expect to see a third wave to the downside in the cable during the next few weeks. Strenght should pick up and manifest within momentum indicators. Moreover, the darker grey trend channel should not penetrate the upside significantly during the third wave. Both typical third wave characteristics should be visible or we are most likely wrong in our wave interpretation.

The ongoing Brexit related newsflow continues to provide fertile soil for GBP/xxx related narratives that could trigger significant price moves.

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