GBP/USD’s sharp fall argues that corrective recovery from 1.2559 has completed at 1.2763 already. Initial bias remains on the downside this week for 1.2559 first. Break will resume the whole fall from 1.3381 and target 1.2391 low next. On the upside, in case of another recovery, upside should be limited by by 1.2865 support turned resistance to bring fall resumption eventually.
In the bigger picture, medium term decline from 1.4376 (2018 high) is possibly ready to resume. Decisive break of 1.2391 would target a test on 1.1946 long term bottom (2016 low). For now, we don’t expect a firm break there yet. Hence, focus will be on bottoming signal as it approaches 1.1946. In any case, medium term outlook will stay bearish as long as 1.3381 resistance holds, in case of strong rebound.
In the longer term picture, consolidative pattern from 1.1946 (2016 low) could still extend with another rising leg. But after all, decisive break of 38.2% retracement of 2.1161 (2007 high) to 1.1946 at 1.5466 is needed to indicate long term reversal. Otherwise, an eventual downside breakout will remain in favor.
