The GBP/USD pair experienced a drop from 1.3433 to 1.2906 last week, but managed to find a temporary low and make a recovery. This week, the initial bias suggests a neutral outlook for consolidations. It is anticipated that further decline will occur as long as the minor resistance level of 1.3070 holds. If the price falls below 1.2906, the next target would be the 61.8% retracement level of 1.2298 to 1.3433, which stands at 1.2732. However, if there is a firm break above the resistance level of 1.3070, it could indicate a short-term bottoming and shift the bias towards a stronger rebound.
Looking at the bigger picture, there is a mildly bearish divergence in the daily MACD, suggesting that a medium-term peak may have already been reached at 1.3433. The price movements following this peak are viewed as a correction within the overall uptrend from 1.0351 (2022 low). If a deeper decline occurs, the next level to watch for is the 38.2% retracement level of 1.0351 to 1.3433 at 1.2256, which is in close proximity to the structural support at 1.2298. It is expected that strong support will be found at these levels, leading to a rebound.
From a long-term perspective, as long as the support level of 1.2298 remains intact, the upward movement from the long-term low of 1.0351 is likely to persist. The significant break of the 55-day EMA (currently at 1.2811) indicates a reversal in the bullish trend. However, confirmation of this trend reversal would require a break above the structural resistance level of 1.4248. Without this confirmation, the price actions following the low of 1.0351 could potentially be part of a consolidation pattern.
