The GBP/USD pair saw a significant breakthrough last week, surpassing the 1.2859 resistance level and confirming a continuation of the rally that began at 1.2298. As we look ahead to the coming week, the initial bias remains tilted towards the upside. The next target for the pair is set at 1.3173, which represents a 100% projection of the movement from 1.2298 to 1.2859 starting from 1.2612. It’s worth noting that this target is slightly above the key medium-term resistance level of 1.3141. However, should the pair drop below the 1.2898 minor support level, the bias may shift to a more neutral stance, leading to a period of consolidation before another potential rally.
Taking a step back to consider the bigger picture, it’s possible that the corrective pattern from the medium-term top of 1.3141 (reached in 2023) has completed with three waves down to 1.2298. This scenario is likely to remain the preferred one as long as the support at 1.2612 holds. In the event of a clear break above 1.3141, the next target would be the 61.8% projection of the movement from the 2022 low of 1.0351 to 1.3141 from 1.2298, which sits at 1.4022.
Looking even further into the future, as long as the support at 1.2298 remains intact, we can expect the upward trend from the long-term low of 1.0351 to persist. However, it’s crucial to keep an eye out for a decisive break above the structural resistance level of 1.4248, as this would be a strong signal of a bullish trend reversal. Without such a breakthrough, the price actions following the 1.0351 low could be viewed as a consolidation pattern rather than a true trend reversal.
In summary, the GBP/USD pair is currently showing signs of strength as it continues its rally from 1.2298. With key resistance levels and targets in sight, traders and investors will be closely monitoring the pair’s movements in the coming days to gauge the potential for further gains or a shift in momentum.