The Medium Term Elliott Wave Analysis of GBP/USD posted here on 11th May (when Sterling was trading at 1.4836) suggested that we will first dip to 1.4226 and then rally to around 1.5500. The actual low was 1.4230 and today we are trading at 1.5590 levels. A couple of days I had prepared the chart you see here, where I am expecting the Pound to run into some selling once it gets to 1.5655 levels. In the medium term elliott wave analysis referred above, I had said the GBP can resume its decline towards 1.3600 once we top out around 1.5500. You must be wondering if I still subscribe to that view. The answer is Yes. I don’t usually change my medium term view until proved wrong. I will revisit that count if we close above 1.5710. For the time being, given the positive sentiment for the Sterling Pound, we shouldn’t except a direct collapse. Rather it is more likely that we will see a dip to the mid 1.52s and then recover again, perhaps to 1.5500 area and only then commence a serious decline. Remember, it is seldom a straight line move. We shall look at this currency pair in a few days to assess how things are going.
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