GBPUSD is increasingly bearish after breaking below the key 1.3400 level and the 2-week decline is threatening to reverse the September rally to 1.3656. The brief consolidation range near the highest levels since June 2016 broke down last week and momentum signals are turning more negative.
The broader market structure looks bullish, showing GBPUSD slowly advanced from the 1.2000 area since the early part of this year. The crossover of the 50-day moving average above the 200-day MA in May gave a bullish signal. It remains to be seen whether the recent drop in prices is just a corrective move of the strong September rally.
GBPUSD is testing fresh 2-week lows and is approaching key support at 1.3200. This level is approximately the mid-point of the recent advance from 1.2773. A break below 1.3200 opens up the way for a drop towards the 50-day MA and to the key 1.3000 level.
Only a rise back above 1.3400 would ease downward pressure and indicate that the 2-week decline from 1.3656 was a corrective move of the broader uptrend.
GBPUSD is expected to remain under pressure in the short-term as momentum signals are shifting. RSI is falling and MACD is reversing its rise. Near term risk is tilted to the downside but the broader bullish picture is still intact as long as the market remains above 1.3200.