The part of the trend, originating on September 23, has taken on a five-wave completed form. But the internal wave structure of the supposed 5-5 still looks not entirely convincing and may require some additions and adjustments. Nevertheless, the upward trend has been nearing its end for a long time. The demand for the pound sterling, however, remains quite high, and this factor may lead to a further complication of the upward trend.

On the younger chart, the wave counting looks rather complicated. This is because in recent weeks the instrument has been trading in a very narrow range, without canceling the construction of an upward trend section. At the moment, the instrument quotes may continue to rise within the wave 3-5-5, although this wave takes on a rather extended form. The internal wave counting of wave 5-5 does not look entirely convincing. In recent weeks, the instrument has been trading around the 127.2% Fibonacci level without serious jumps.

The demand for the pound in the foreign exchange market remains quite high and does not decrease. That is why the currency remains near its two-year highs and does not budge. Even with the construction of a simple corrective wave, serious problems arise. However, today and tomorrow several important events can help the markets make a decision.

UK's PMI for the services sector for January is expected to be released today, which may not remain at an extremely low level. If the real value of business activity does not exceed 40.0, it may cause sales of the pound sterling.

The US ADP report on the change in the number of employees is also expected today. This report is considered important enough, but markets react to it when there is a strong discrepancy between expectations and reality. The forecast for today is around 48,000. If the actual number of employees grows by 100,000 or more, the demand for the US dollar may slightly increase. Conversely, if in fact, the number of employees decreases, then the sterling can resume building an upward wave.

The most important event of the week will take place tomorrow. Nobody expects major changes in monetary policy from the Bank of England at the first meeting of 2021. However, everyone is waiting for comments from the governor of the Bank of England, Andrew Bailey. Markets want to know if negative rates will be introduced soon. What is the opinion of the rest of the members of the monetary committee on this issue? The answers to these questions can seriously affect the demand for sterling. Any hints of a possible cut in the key rate should reduce its demand. Also, the GDP for the fourth quarter in the UK will soon be known. Let me remind you that the EU's GDP contracted yesterday. Most likely, the same fate awaits the British economy.

General conclusions and recommendations:

The Pound-Dollar pair continues to build the upward trend. Thus, at present, I recommend buying the instrument in case of a successful attempt to break the 1.3750 mark with targets located near the 40th figure, within the expected 3-5-5 waves of the upward trend. So far, there are no clear signals about the end of the upward trend segment.