GBP/USD dripped to 1.5409 last week, attempted to resume fall from 1.6165 but lacked follow through selling. Initial bias is neutral this week and stronger recovery cannot be ruled out. But we'll stay cautiously bearish as long as 1.5779 cluster resistance holds (50% retracement of 1.6165 to 1..5409 at 1.5787) and expect another decline. Below 1.5409 will target a test on 1.5271 next. Break there will confirm resumption of whole decline from 1.6460 too and should target 1.5 psychological level and below.

In the bigger picture, no change in the view that price actions from 1.3503 are treated as consolidations to long term down trend from 2.1161. At this point, we're favoring the case that such consolidation is either finished with three waves to 1.6746, or five waves as a triangle at 1.6165. Break of 1.5271 support will affirm either case and should target 1.4229 key support. Decisive break there should extend the long term down trend through 1.3503 low. Meanwhile, strong rebound ahead of 1.4229, or a break of 1.6165, will dampen the immediate bearish view and extend the consolidation from 1.3503 instead.

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.

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