GBP/USD dropped further to as low as 1.5690 last week but recovered from there. Break of 1.5876 minor resistance argues that correction from 1.6165 is finished, inside mentioned 1.5631/5851 support zone. Initial bias is mildly on the upside this week for test on 1.6165 resistance. However, firstly, below 1.5690 will suggest that fall from 1.6165 has resumed. Secondly, break of 1.5631 support will argue that whole rebound from 1.5271 has finished and will bring deeper fall to retest this support.
In the bigger picture, price actions from 1.3503 are treated as consolidations to long term down trend from 2.1161. Such consolidation should be in form of triangle and current development suggests that rise from 1.5271 is the fifth leg, the final leg of such pattern. Hence, while current rise from 1.5271 might extend higher, upside should be limited below 1.6746 resistance to conclude the consolidation finally. On the downside, break of 1.5271 support will indicate that the down trend from 2.1161 is finally resuming for a new low below 1.3503. Nevertheless, break of 1.6746 will invalidate this view and would likely bring stronger rally to 1.7043 resistance and above.
In the longer term picture, the corrective nature of the multi-decade advance from 1.0463 (85 low) to 2.1161 as well as the impulsive nature of the fall from there suggests that GBP/USD is now in an early stage of a long term down trend. Another low below 1.3503 is anticipated after consolidation from 1.3503 is confirmed to be completed.