GBP/USD's decline from 1.6744 extended further to as low as 1.6416 last week and broke 1.6166 support. Initial bias remains on the downside this week and deeper decline should now be seen towards key near term support level at 1.5935. On the upside, above 1.6307 minor resistance will turn bias neutral and bring recovery. But risk will remain on the downside as long as 1.6515 resistance holds and further decline is still in favor.
In the bigger picture, price actions from 1.3503 (2009 low) are treated as consolidation to long term down trend from 2007 high of 2.1161. Rise from 1.4230 is treated as the third leg of such consolidation and with 1.5935 support intact, such rise could still continue for 1.7043 resistance. But after all, strong resistance should be seen between 1.7043 and 50% retracement of 2.1161 to 1.3503 at 1.7332 to limit upside. On the downside, below 1.5935 support will indicate that rise from 1.4230 is completed and further break of 1.5343 will confirm this case and target 1.3503/4230 support zone.
In the longer term picture, the corrective nature of the multi-decade advance from 1.0463 (85 low) to 2.1161 as well as the impulsive nature of the fall from there suggests that GBP/USD is now in an early stage of a long term down trend. Another low below 1.3503 is anticipated after rebound from 1.3503 is confirmed to be completed.