The GBP/USDis testing the bottom of the downtrend channel (green). A bearish breakout could indicate a bearish continuation whereas a bullish bounce could indicate a larger ABC correction.
The GBP/USD downtrend seems to be losing energy when taking into account the mild angle of the channel, which also created divergence between the bottoms and is making an ABC correction more likely at the moment. However, a bearish breakout changes the equation and indicates more downside.
The GBP/USD has either completed a bearish ABC (blue) within wave B (purple) or price is in an impulsive wave 3 (red). For a wave 3 to be valid, price needs to break below the support trend line (green).
