The GBP/USD pair rose further to 1.3557 last week before pulling back. The current development says that the corrective pattern from 1.3867 has been completed with three waves down to 1.3139. Above 1.3557 it will target 1.3657 first. A strong breakout there will bring a retest of the high price 1.3867. However, a break of the support at 1.3339 would temper this bullish outlook and bring back a deeper decline to 1.3139 instead.
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.
