GBPUSD seems to be progressing higher to produce a counter trend rally towards 1.3200 mark, before it faces resistance. Bears might remain poised to take control back from there and push lower towards 1.2200 handle over the next several weeks.
GBPUSD had dropped to fresh yearly lows at 1.1414, around March this year. Since then, the currency has remained in control of bulls carving a series of higher lows and higher highs through 1.3500 handle. Also note that the above rally seems to be an impulse wave.
Ideally, an impulse wave (sub divided into 5 waves) is followed by a corrective wave (3 waves) in the opposite direction/against the major trend. GBPUSD bears should most likely produce a corrective wave A-B-C towards 1.2200 mark before finding support again.
Also note that fibonacci 0.618 retracement of the above rally is seen to be passing through 1.2200 levels as depicted on the daily chart here. If prices manage to drop lower towards 12200 mark, probability for a bullish reversal would remain high.
GBPUSD also seem to have carved an intermediary high just below the 1.3500 handle. The currency is expected to remain in control of bears until prices stay below 1.3500 going forward. Further, the recent drop between 1.3500 and 1.2675 might be Wave A within the A-B-C drop.
If the above structure is correct, GBPUSD might produce a counter trend rally towards 1.3200 mark to terminate Wave B. Thereafter, it could turn lower again to terminate around 1.2200 a Wave C.
Short against 1.3500, target is 1.2200