GBP/USD plunged last week after rising to 1.2678, but so far has been above the 1.2434 support. Initial bias remains neutral this week. On the downside, a decisive breakout of 1.2434 will secure a short-term top. Considering the bearish divergence condition on the D MACD, the drop from 1.2678 is a correction to the overall uptrend from 1.0351. After that, we should see a deeper drop towards the 1.1801 cluster support (38.2% retracement from 1.0351 to 1.2678 at 1.1789).
Overall, we expect the rally from the 1.0351 mid-term low (2022 low) to grow further as long as the 1.1801 support holds. A continued break of the 61.8% retracement from 1.4248 (2021 high) at 1.2759 to 1.0351 would increase the likelihood of a long-term bullish trend reversal. However, a sure break of 1.1801 will show rejection by 1.2759, and even a correction will lead to a deeper drop.
Longer-term outlook, while the rally from 1.0351 (2022 low) was strong, there are still no clear signs of a long-term trend reversal. As long as the 1.4248 resistance (2021 high) holds, the long-term outlook will remain neutral at best.
