GBPUSD has staged a modest recovery, but the broader structure still leans bearish. From the 1.3871 high, we can clearly identify a five-wave decline into the 1.32 area—an important zone we had been monitoring. This impulsive move to the downside suggests that the larger trend remains pointed lower.
The subsequent bounce, however, is proving to be more complex than initially anticipated. Current price action is best described as a W-X-Y corrective structure unfolding from the recent lows. At present, the pair appears to be trading within the final (Y) leg of this correction.
This corrective phase still has room to extend higher. Key resistance levels to watch include the 50% Fibonacci retracement of the prior decline, as well as the 1.3570 area. A move into this region would remain consistent with the idea of a corrective recovery rather than a full trend reversal.
As long as price remains below these resistance zones, the broader outlook suggests this is still a temporary pause within a higher-degree downtrend. A resumption of bearish momentum later this week remains a strong possibility, especially if resistance levels hold and downside structure begins to reassert itself.
Traders should stay alert for signs of exhaustion in the current rally, as they may offer opportunities to align with the prevailing trend.
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