GBP/USD edged higher to 1.2783 last week but retreated quickly. Initial bias remains neutral this week first. Further rise cannot be ruled out. But upside should be limited by 38.2% retracement of 1.3381 to 1.2506 at 1.2840 to complete the corrective rise from 1.2506. On the downside, break of 1.2642 minor support will bring retest of 1.2506 low. However, sustained break of 1.2840 will bring stronger rise to 61.8% retracement at 1.3047 next.
In the bigger picture, down trend from 1.4376 (2018 high) is still in progress. 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.
