FX.co ★ GBP/USD Analysis on August 22, 2025

For GBP/USD, the wave pattern continues to indicate the development of an upward impulsive wave structure. The wave configuration is almost identical to that of EUR/USD since the only true "driver of the show" remains the US dollar. Demand for the dollar is declining across the market in the medium term, so many instruments show nearly the same dynamics. At present, wave 4 is presumably complete. If this is indeed the case, the upward movement will continue within impulsive wave 5. Wave 4 could take the form of a five-wave structure, but that is not the most likely scenario.

It should be remembered that much on the currency market now depends on Donald Trump's policies, and not only trade-related ones. From time to time, the US releases decent economic data, but the market constantly keeps in mind complete economic uncertainty, contradictory decisions and statements by Trump, as well as the hostile and protectionist stance of the White House. Global tensions are rising, and, as I mentioned, the dollar remains the main culprit of the situation, hence it takes all the blows.

The GBP/USD pair hardly moved on Friday, but over the week, demand for the British pound gradually fell, leading to a 140-point decline by the week's end. In my view, such a decline does not allow for any dramatic conclusions. The instrument is falling within an overall upward structure — so what? Even a novice trader knows about corrections and pullbacks. To be clear, I did not expect GBP/USD to show a steady decline this week. At the same time, corrective wave 2 was necessary, so the working scenario remains unchanged. Already today or early next week, the construction of corrective wave 2 may be completed. If so, the upward move will resume, with targets above the peak of wave 3.

The only danger for the current wave pattern and the pound lies in Jerome Powell's speech at Jackson Hole. In my view, the Fed Chair will not present any surprises because he generally dislikes giving promises, hints, or careless statements that could later backfire. And now, with Donald Trump pressing Powell personally and the Fed as a whole every day, the central banker will be more cautious than ever. I even allow for the possibility that Powell could act on principle and declare that inflation remains the regulator's primary mandate — not because he firmly believes it, but because Trump continues to use various "dirty" methods to push for a rate cut. Adriana Kugler has already been forced to step down from the Fed Board, and Lisa Cook may leave soon. Powell might simply retaliate against Trump at the end of his term, while still acting within the law.

General Conclusions

The GBP/USD wave pattern remains unchanged. We are dealing with an upward impulsive segment of the trend. Under Donald Trump, the markets may face numerous shocks and reversals, which could significantly affect the wave structure. But for now, the working scenario remains intact. The targets of the upward segment are now near 1.4017. At present, I assume that the construction of corrective wave 4 is complete. Wave 2 within 5 is also nearing completion. Therefore, I recommend buying with a target at 1.4017.

Main principles of my analysis:

1. Wave structures must be simple and clear. Complex ones are hard to trade and often bring revisions.
2. If there is no confidence in what is happening in the market, it is better to stay out.
3. One can never have 100% certainty about market direction. Always use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.