GBP/USD: corrective only, so where does this go from here?

Currently, GBP/USD is trading at 1.2835, down -0.03% on the day, having posted a daily high at 1.2865 and low at 1.2805.

GBP is flat in consolidation awaiting Thursday’s Q1 GDP, with consensus looking to 0.4% q/q and a y/y pace of 2.2%. "The 2Y U.K.-U.S. yield spread has widened considerably over the past week, and GBP appears vulnerable, with a –117bpt spread implying GBP levels closer to 1.25," explained analysts at Scotiabank. "Risk reversals highlight a relentless erosion in the premium for protection against GBP weakness." 

However, given that the recent price action appears corrective, much more faltering on the 1.28 handle could trigger a sharp slide back to the 1.2615 pivot according to analysts at Westpac. "Price action off the 1.1840-1.20 area remains corrective and a retest of this area remains a likely scenario once corrections show signs of faltering," Tim Riddell, Research Analyst at Westpac explained.

A bearish trading plan to sell GBP/USD to 1.2630 - Westpac

GBP/USD levels

The analysts at Scotiabank suggest that GBP/USD's short-term technicals are neutral. "We await a break of the recent consolidation tightly bound around 1.28. Bullish momentum signals are softening from near-overbought levels and bullishly aligned DMI’s are suggestive of exhaustion. We look to resistance at 1.29 and