GBPUSD seems be in progress to post a bullish correction of the strong sell-off following the pullback on 1.4375. The pair successfully surpassed the 23.6% Fibonacci retracement level of the downleg from 1.4375 to 1.2660, around 1.3066, as well as the 20- and 40-simple moving averages (SMAs) in the daily timeframe. The technical indicators are moving with weak momentum in the positive territory, with the RSI sloped slightly to the upside and the MACD is approaching the trigger line to create a bullish cross.
Should the pair stretch north, the September 20 high of 1.3300 could provide immediate resistance before the pair touches the 38.2% Fibonacci of 1.3315. A significant step higher could bring the bullish sentiment back into play, sending the price probably towards 1.3475, which was a strong barrier back in June 7. If the buying interest extends further, attention could then turn to the 50.0% Fibonacci of 1.3515.
An alternative scenario could push the cable lower, below the 23.6% Fibonacci and the 40-SMA towards the next support at 1.2920, taken from the latest lows. If traders continue to sell the pair, the price could fall until the 1.2780 barrier, while steeper declines could also touch the 14-month low of 1.2660. The latter move would also clearly turn the bias to a more neutral one and in case of a drop below 1.2660, it would confirm once again the bearish structure.
To sum up, GBPUSD is expected to have another upside rally before turning lower again in the short term and a clear break above the 38.2% Fibonacci could confirm the view for a bullish reversal.