GBPUSD had raised through 1.3500 handle before reversing sharply. Bears have remained in control since then, and the currency had reached 1.2760 levels before pulling back. Also note that initial support at 1.3000/50 mark has been taken out with ease, confirming a reversal.
GBPUSD might produce a pullback rally towards 1.3250 mark, before finding resistance again. The fibonacci 0.618 retracement of the drop between 1.3500 and 1.2760 is also seen around 1.3200/50 handle. Probability remains high for a bearish reversal if prices manage to reach there.
Alternately, GBPUSD bears might push lower one more time through 1.2690 mark before finding support. Please note that fibonacci 0.382 retracement of the entire rally between 1.1414 and 1.3500 is seen through 1.2690 levels and hence should be well supported.
The larger degree wave structure suggests that GBPUSD might have carved an impulse Wave (1) between 1.1414 and 1.3500 respectively. Ideally, it should produce a corrective drop at a similar degree that could reach 1.2200 levels, going forward.
Also note that fibonacci 0.618 retracement of the above rally is also seen through 1.2200 mark. If prices manage to drop through those levels, bulls might be inclined to regain control. The proposed corrective wave should unfold in 3 waves, flat or zigzag.
The lower degree wave structure suggests potential Wave A might be in place around 1.2760 or it could terminate around 1.2700 levels. Wave B should retrace higher before Wave C resumes the drop lower towards 1.2200 levels.
Short against 1.3500, targeting 1.2200.