GBP/USD’s fall from 1.3297 extended last week and the break of 1.3042 support should confirm our bearish view. that is, corrective rise from 1.2661 has completed with three waves up to 1.3297, ahead of 1.3316 key fibonacci level. Initial bias stays on the downside for 1.2784 support first. Break there will likely resume larger down trend from 1.4376 through 1.2661 low. On the upside, above 1.3089 minor resistance will turn intraday bias neutral and bring consolidation, before staging another decline.
In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA (now at 1.4099). The structure and momentum of the fall from 1.4376 argues that it’s resuming long term down trend. And this will be the preferred case as long as 38.2% retracement of 1.4376 to 1.2661 at 1.3316 holds. However, firm break of 1.3316 would bring stronger rebound to 61.8% retracement at 1.3721. And, the eventual depth of the fall from 1.4376, and the chance of hitting 1.1946 low, will depend on the strength of the interim corrective rebound from 1.2661.
In the longer term picture, outlook in GBP/USD is held bearish. Rebound from 1.1946 was rejected solidly by falling 55 month EMA. The pair was limited well below 38.2% retracement of 2.1161 (2007 high) to 1.1946, as well as the decade long falling trend line. On break of 1.1946, next target will be 61.8% projection of 1.7190 to 1.1946 from 1.4376 at 1.1135.