The GBP/USD pair continued to decline last week, falling from the short-term high of 1.2859 despite a temporary recovery. This week, the initial bias is towards further downside movement. If the key support-turned-resistance level of 1.2633 is broken and sustained, it may indicate that the entire upward movement from 1.2298 has come to an end, with potential targets at 1.2445 and below. As of now, the risk remains tilted to the downside as long as the resistance at 1.2739 remains intact, even in the event of a potential recovery.
Taking a broader view, the price action following the medium-term high of 1.3141 is considered to be part of a corrective pattern that is still unfolding. A breach of the 1.2445 support level would confirm the start of another downward move, possibly targeting the 1.2036 cluster support area once again (which represents the 38.2% retracement level of the move from 1.0351 to 1.3141). On the other hand, a breakout above the 1.2892 resistance level could suggest that the overall uptrend from 1.0351 is set to resume, potentially reaching towards 1.3141 once more.
Looking at the long-term perspective, it is believed that a significant bottom was established at 1.0351, supported by bullish convergence signals in the M MACD indicator. However, the momentum of the rebound from 1.3051 indicates that the GBP/USD pair is likely undergoing a consolidation phase rather than a full-fledged trend reversal. As a result, it is probable that the pair will engage in range-bound trading between the levels of 1.0351 and 1.4248 for the foreseeable future.
In conclusion, the GBP/USD pair is currently facing downward pressure, with key support levels in focus. Traders and investors should monitor the 1.2633 and 1.2739 levels for potential breakout or reversal signals. Moreover, a breach of the 1.2445 support level could pave the way for further declines towards 1.2036, while a breakout above 1.2892 may lead to a resumption of the overall uptrend. It is essential to keep an eye on these levels and market conditions to make informed trading decisions in the coming weeks.