GBP/USD rose to as high as 1.3549 last week, formed a temporary top there and retreated. Initial bias is neutral this week first. But retreat should be contained by 1.3337 resistance turned support to bring another rise. Above 1.3549 will target 1.3651 and above. However, decisive break of 1.3337 will argue that rise from 1.3038 has complete d and turn bias back to the downside for this support.
In the bigger picture, while the medium term rebound from 1.1946 low is strong, it’s still limited below 1.3835 key support turned resistance. As long as 1.3835 holds, we’d view such rebound as a correction. That is, we’d expect another leg in the long term down trend through 1.1946 low. However, sustained break of 1.3835 should at least send GBP/USD to 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466.
In the longer term picture, long the outlook is turned a bit mixed as GBP/USD failed to sustain above long term falling tend line resistance, nor 1.3835 key resistance. We’ll stay neutral first and assess the outlook again and price actions unfold.
