GBPUSD bears seem to be in complete control as they drag over 500 pips lower from 1.3500 handle. The currency has dropped to 1.2950 today, taking out support around 1.3000 levels. The tone is set for a deeper move towards 1.2100/1.2200 levels going forward.
GBPUSD might have completed its first impulse drop from 1.3500 highs through 1.2950 lows today. Ideally, it should be followed by a corrective rally through 1.3200/1.3300 before resuming lower again. The counter trend could resume anytime soon.
GBPUSD had earlier produced a religious uptrend between 1.1414 lows in March 2020 and 1.3500 last month. The entire rally could be seen as a potential impulse wave and has been marked accordingly as larger degree Wave (1) around 1.3500.
High probability remains for an A-B-C corrective drop, pushing prices lower towards 1.2100/1.2200 levels and terminating potential Wave (2). GBPUSD can resume its larger degree trend thereafter, which could point toward 1.4300 and higher.
Also note that fibonacci 0.618 retracement of the above rally is passing through the 1.2200 handle. If prices manage to drop there, bulls might be inclined to produce a bullish bounce and continue its rally as described above. The current drop could be defined as potential Wave A of the A-B-C correction.
If the above proposed structure holds well, a Wave B should resume higher towards 1.3200 levels anytime soon from here. GBPUSD could then turn lower towards Wave C lower. The currency remains a good candidate to be sold on rallies from here.
Short against 1.3500, target is open.