GBP/USD’s rebound from 1.3158 extended higher last week but failed to decisively break the 61.8% retracement level from 1.3867 to 1.3158 at 1.3596. Initial bias remains neutral this week first. On the upside, a sustained break of 1.359 will pave the way for a retest of the high of 1.3867. However, a strong breakout of 1.3379 will bring a deeper decline to the low of 1.3158 instead.
In the bigger picture, the current development suggests that price action from 1.3867 is merely a corrective pattern within the broader uptrend from 1.0351 (2022 low). With support holding at 1.3008, the uptrend continues in the medium term and a break of 1.3867 returns in favor of a later stage, towards the main resistance 1.4248 (2021 high).
In the longer term picture, as long as the 1.4248/4480 resistance area holds (38.2% retracement from 2.1161 to 1.0351 at 1.4480), the long term outlook will remain bearish. That is, price movements from 1.0351 are considered a corrective pattern for the downtrend from 2.1161 (2007 high) only. However, a decisive break of 1.4248/4480 would be a strong signal of a long-term bullish reversal.
