The wave pattern for GBP/USD continues to indicate the formation of a bullish impulsive wave structure, thanks to Donald Trump. The wave picture is almost identical to that of the EUR/USD pair. Until February 28, we observed the development of a clear corrective structure, which did not raise any concerns. However, demand for the U.S. dollar then began to decline sharply. As a result, a five-wave upward structure was formed. Wave 2 took the shape of a single wave and is now complete. Therefore, we should expect a new upward movement of the pound within wave 3, which has been ongoing for the past three weeks.

Considering the fact that the news background from the UK had no real influence on the strong growth of the pound, we can conclude that exchange rates are being driven by Donald Trump. If (theoretically) Trump changes course on trade policy, then the trend could also change—this time to a downward one. Therefore, over the coming months (or perhaps even years), all actions from the White House should be closely monitored.

The GBP/USD pair declined slightly on Tuesday, but overall, market movements were muted. The news background was virtually nonexistent, with only a slew of speeches by central bank officials offering any interest. However, who really pays attention to officials discussing potential future decisions when the market largely ignores the actual decisions of central banks?

On May 12, the pound declined to 1.3140, and as of now, this level seems like a dream for the dollar. While the wave structure isn't the cleanest, it clearly points to the development of an upward trend. No matter how complex and ambiguous the internal structure is, specific signs of trend completion must appear before any serious discussion of U.S. dollar strength can begin. At this time, I see no signs of a trend reversal—not even after news of a global trade war de-escalation.

I have no doubt that trade tensions will ease over time. Of course, Trump could introduce new tariffs or use them as leverage to achieve his geopolitical goals. So, more surprises from Trump in the future are virtually guaranteed. But let's not speculate on things that haven't happened yet. Over the past month, I can state only one fact: the trade conflict between the U.S. and some 75 countries has improved. Tariffs are being lowered, negotiations are ongoing. These talks may last longer than three months, but that's still better than excessive tariffs, blocked trade, and no dialogue at all. However, the market has yet to react positively. Therefore, it seems to be waiting for new negative developments in order to sell the dollar again.

General Conclusions

The wave picture for GBP/USD has transformed. We are now dealing with a bullish, impulsive segment of the trend. Unfortunately, with Donald Trump in the picture, markets may face many more shocks and reversals that defy wave structure and any form of technical analysis. The upward wave 3 continues to build, with nearby targets at 1.3541 and 1.3714. Therefore, I continue to consider long positions, as the market currently shows no intention of reversing the trend again.

On the higher wave scale, the wave structure has also shifted to bullish. We are likely seeing the beginning of a longer upward trend segment, which at this stage does not appear to be complete. For now, further upward movement can be expected.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are hard to trade and often lead to unpredictable changes.
2. If you are uncertain about what's happening in the market, it's better to stay out.
3. There can never be 100% certainty about market direction. Always remember to use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.