With last week’s extended decline, the immediate focus for GBP/USD is now on the 1.3158 support. A decisive break there would resume the entire drop from 1.3867 to the 100% forecast from 1.3867 to 1.3158 from 1.3657 at 1.2948. On the upside, minor resistance above 1.3260 will shift the intraday bias to neutral and lead to consolidation first, before seeing another decline.
In the bigger picture, price action from 1.3867 is a corrective pattern within the broader uptrend from 1.0351 (2022 low). With support holding at 1.3008, the upward trend continues in the medium term and a break of 1.3867 is likely for a later stage, towards the main resistance 1.4248 (2021 high). However, a strong break of 1.3008 would at least lead to a deeper decline to the 38.2% retracement from 1.0351 to 1.3867 at 1.2524, with an increased risk of a bearish reversal.
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.
