The GBP/USD pair initially rallied during the session on Tuesday, but fell rather sharply shortly afterwards. As you can see by this chart, we have sliced through the 1.5250 level again, which of course was the epicenter of support going forward. However, I still think that there is support going all the way down to the 1.52 handle. It is below there that things get really interesting.
As I write this, the markets are coming close to closing out the daily candle. We are currently sitting just above the 1.52 handle, and as a result I think that a breakdown is coming. If we can solidly close below the 1.52 handle, I believe it open the door to the 1.50 handle in relatively quick fashion. Granted, there is some noise back in March just below, but the significant support will been broken at that point.
Perhaps it was an overreaction to UK economic numbers
The initial bounce from the 1.5250 level was in reaction to the GDP numbers out of the United Kingdom. It was expected that the United Kingdom would have entered a "triple dip recession", and the markets were surprised when the economic numbers came out positive. Granted, we were talking a GDP of 0.1%, which is anemic - but it wasn't negative. Because of this, the country had technically avoided a recession.
However, the anemic growth isn't enough to drive demand for the British pound for anything resembling the long-term strength. Also, this does not mean that the British economy is completely out of the woods. Quite frankly, it wouldn't take much to drop 1/10 of a percent of GDP from either the estimates or the final numbers. That being the case, I believe that the "adults" have reenter the market and started selling the British pound after the initial euphoria was expressed.
I believe that there will be a significant fight at the 1.50 handle as well, and a move below there would indeed be very negative for the Pound. In the meantime though, I do believe that there are about 200 pips up for grabs for the sellers.