The UK is once again sinking under the weight of economic and financial troubles. Recall that the "British drama" began in 2016, when by a margin of several percentage points the British people decided to break off official ties with the European Union and begin building a fully independent United Kingdom. Nearly ten years have passed, and many opinion polls now show that Britons are starting to regret their decision. A trade agreement with the EU was signed with great difficulty, but many problems remain unresolved. One of them is labor supply: earlier, migrants came to the country for high wages and took on low-skilled jobs that Britons themselves were unwilling to do.

The economic problems are even more numerous. The post-Brexit economic boom never materialized, and the UK economy has been growing at a sluggish pace—something that could still be attributed to the generally weak growth across the European region. Industrial production continues to decline, inflation is rising again, and the Bank of England is cutting rates while promising a return of the Consumer Price Index to its target.

As for political problems, there is no need to list them all. Every prime minister over the past decade has left office prematurely. A couple of years ago, after Boris Johnson stepped down, power shifted to the Labor Party under Keir Starmer, but the change in ruling party has not significantly improved the situation. The country is now trying to put together a budget for 2026, but the process is going very poorly. Revenues are insufficient, expenses are higher, and tax hikes are on the table—something unlikely to please Britons.

Tax increases are not only an unpopular economic measure; they are also directly tied to the next elections, where Labor could end up losing. A few weeks ago, the UK faced an unprecedented rise in government bond yields. At that time, the market sold off the pound heavily, anticipating serious problems.

Rising bond yields mean fewer investors are interested in UK government bonds. Consequently, higher yields must be offered, which increases the burden on the budget, since the debt still has to be serviced.

As a result, the British currency continues to fall regularly because of issues that do not occur in every country and under every government. However, the pound's upward trend does not change, because the scale of the problems in the United States is even greater. For now, the pound's budgetary troubles cannot make market participants turn toward the "alternative" and once-beloved US dollar.

Wave structure for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the instrument continues building an upward segment of the trend. The wave pattern still fully depends on the news background tied to Trump's decisions and the foreign and domestic policy of the new US administration. The targets of the current upward segment may extend to the 1.25 level. The news background remains unchanged, therefore I continue to stay in long positions, despite the first target around 1.1875 (161.8% Fibonacci) having already been met. By year-end, I expect the euro to rise to 1.2245, which corresponds to the 200.0% Fibonacci level.

Wave structure for GBP/USD:

The wave structure of GBP/USD remains unchanged. We are dealing with an upward, impulsive segment of the trend. Under Donald Trump, markets may face many shocks and reversals that could strongly affect the wave structure, but at the moment the working scenario remains intact, and Trump's policy has not changed. The targets of the upward segment are located near the 261.8% Fibonacci level. At present, I expect the pair to continue rising within wave 3 of 5, aiming for 1.4017.

Key principles of my analysis:

1. Wave structures should be simple and clear. Complex structures are hard to trade and often bring changes.
2. If you are not confident in what is happening in the market, it is better not to enter.
3. There can never be 100% certainty in market direction. Do not forget protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.