GBPUSD might be preparing to carve a meaningful lower top either around 1.3000 handle or push towards 1.3150/75 levels. The currency is then expected to turn lower towards 1.2200 handle over the next several weeks, before finding support. Ideally it should stay below 1.3500 levels going forward.
GBPUSD had earlier dropped through 1.1414 multi-year lows before finding bids. The currency then produced a religious rally towards 1.3488 mark, carving a series of higher lows and higher highs. Also note that the entire rally between 1.1414 and 1.3488 seems to be an impulse wave.
Ideally, an impulse wave is followed by a similar degree corrective wave towards the opposite direction. If the above unfolds as above, GBPUSD might be underway, to produce a corrective drop A-B-C towards 1.2200 levels. Furthermore, it might have produced Wave A and B around 1.2675 and 1.3070 respectively.
Wave B has retraced up to fibonacci 0.50 levels of Wave A until now, and might push through 1.3175, which is fibonacci 0.618 retracement of Wave A, before reversing lower again. Either way, GBPUSD bears might be looking to come back in control soon.
Also note that 1.2200 is the fibonacci 0.618 retracement of the entire rally between 1.1414 and 1.3488 levels respectively. High probability remains for a bullish reversal, if prices drop through 1.2200 levels going forward. GBPUSD might then turn bullish for a longer term projection towards 1.4300 and beyond.
Short against 1.3500, target is 1.2200.