The British pound sterling is in an even more complicated position than the euro currency. On Friday, out of nowhere, the UK currency plummeted, even though just a day earlier, demand for it had been rising amid the Bank of England's announcement of two interest rate hikes in 2026. Naturally, there was no actual announcement of policy tightening, but the market drew that conclusion. And not without reason. However, as already mentioned, the pound's fortune was short-lived.

In essence, the fate of the British currency also depends on the geopolitical conflict in the Middle East. If the new week begins with the accompaniment of cannons and rockets, then objectively, what can we expect from the GBP/USD instrument? Trump is now threatening to destroy all of Iran's energy infrastructure if the Strait of Hormuz is not unblocked. But no one can understand what he is counting on. That Iran will surrender right now? Of course, that will not happen, and Iranian officials have already warned that following the fall of Iranian energy, all energy and the internet in the Middle Eastern region will also collapse.

Moreover, Iran now considers any American facilities, even those located in the European Union, as legitimate targets. Therefore, in the near future, we may well see missiles flying towards Europe. One does not even want to think about what will happen in that case, although many experts believe that World War III has already begun. By the way, Britain sent a nuclear submarine to the Arabian Sea over the weekend. If the British Navy strikes Iran, what do you think Iran's next step will be?

Discussing the economic news background right now feels somewhat inappropriate. The BoE meeting is one of the most significant events for the pound, but even that only supported demand for a short time. It seems that further dollar strengthening is inevitable, regardless of the data from the British Isles. Still, next week, indices of business activity, inflation, and retail sales will be released in the UK, and the Bank of England's chief economist, Huw Pill, will give a speech.

Wave Picture for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the instrument remains within an upward segment of the trend (bottom picture) but has started forming a short-term downward segment. Since the five-wave impulse structure is complete, in the next week or two, my readers can expect an increase in quotes with targets around the levels 1.1568 and 1.1666, which correspond to 23.6% and 38.2% of the Fibonacci. Further movements of the instrument fully depend on events in the Middle East.

Wave Picture for GBP/USD:

The wave picture for the GBP/USD instrument has become very complex and difficult to read. Now we see a seven-wave downward structure on the charts, which is undoubtedly not that. Most likely, there is elongation or complication within one of the waves. However, this does not make the wave layout clearer. If the wave picture has once been complicated to an unreadable form, it can be complicated several more times. Therefore, I believe it is best to rely on the wave layout of the EUR/USD instrument, which looks much clearer. Also, one should not forget about the geopolitical factor, which can send both instruments into a new decline at any moment. If that does not happen, the euro and the pound can expect an increase within the correction.

Main Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to play back and often carry changes.
2. If there is no confidence in what is happening in the market, it is better not to enter it.
3. There can never be 100% certainty in the direction of movement. Do not forget about stop-loss protective orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.