GBP/USD has extended higher in the last two weeks after its broken trend-line connected from above 1.6300. As such, we labeled its recent big fall as a completed five wave fall in wave I, followed by a corrective bounce which we think is wave II.

That said, recovery from the lows is just temporary so we must be aware of a new sell-off once the pair breaks through the lower support line of a corrective channel. A close somewhere around 1.5050 or lower would suggest that the rally is done and weakness is underway.

Forex Analysis by Gregor Horvat at ForexPros. com