GBP/USD rose to as high as 1.6149 last week and Initial bias remains on the upside this week for 1.6165 cluster resistance. Note that GBP/USD is building upside momentum again with the current rally and 1.6165 would likely be taken out. In such case, completion of decline from 1.6764 should be confirmed. And, stronger rally should be seen to 100% projection of 1.5234 to 1.5991 from 1.5602 at 1.6359 next. On the downside, though, below 1.6037 minor support will dampen the immediate bullish case and turn bias neutral first.

In the bigger picture, price actions from 1.3503 (2009 low) are treated as consolidations to long term down trend from 2.1161, no change in this view. Recent development painted a mixed picture on whether such consolidation is finished. We'll stay neutral first. On the upside, break of 1.6165 will favor that such consolidation is going to extend with another rise. But strong resistance should be seen at 50% retracement of 2.1161 to 1.3503 at 1.7332 to limit upside to conclude the consolidation. On the downside, below 1.5234 will revive the case that such consolidation is completed and bring deeper fall to 1.4229 support for confirmation.

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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