GBP/USD Weekly Outlook

After edging higher to 1.4957 last week, GBP/USD retreated to end the week lower. From a short term angle, further fall could still be seen as long as 1.4777 minor resistance holds. But short term outlook will remain bullish as long as GBP/USD stays above near term rising trend line (now at 1.4442). Rise from 1.3654, which is treated as the third leg of consolidation from 1.3503, is still expected to extend further to 100% projection of 1.3503 to 1.4984 from 1.3654 at 1.5135 before completion. Above 1.4777 will flip intraday bias back to the upside for 1.4957/84 resistance zone first. However, below the trend line support will be an early signal that rise from 1.3654 has completed and will turn focus to 1.4109 support for confirmation.

In the bigger picture, medium term consolidation from 1.3503 is still in progress to correct the five wave sequence from 2.0158 (1.7445, 1.8668, 1.4557, 1.5722, 1.3503). While it's uncertain how far this correction will go, we're expecting upside to be limited by resistance zone of 1.5722 and 38.2% retracement of 2.0158 to 1.3503 at 1.6045. On the downside, below 1.4109 will confirm that rise from 1.3654 has completed and turn short term outlook bearish for retesting 1.3503. But after all, break of 1.3503 is needed to confirm long term down trend resumption. Otherwise, further sideway consolidation could still be seen.

In the longer term picture, as discussed before, the corrective nature of the multi-decade advance from 1.0463 (85 low) to 2.1161 as well as the impulsive nature of the fall from there suggests that GBP/USD is now in an initial stage of a long term down trend. While some medium term scale consolidation might still be seen, the long term down trend is expected to resume after completing such consolidation.

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