GBP/USD edged higher to 1.2705 last week but failed to sustain gain and retreated sharply. Initial bias stays neutral this week first. There is no change in our view that price actions from 1.1946 are a consolidation pattern with rise from 1.1986 as the third leg. Hence, in case of another rise, we’d expect upside to be limited by 1.2774 resistance and bring down trend resumption. On the downside, below 1.2411 minor support will argue that rise from 1.1986 is completed and turn bias to the downside for 1.1946 low.
In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term bottoming yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.
In the longer term picture, no change in the view that down trend from 2.1161 is still in progress. Current momentum suggests that the down trend will go deeper than originally expected.