sword fight combat question?

[Rowan]

Consider 2 combatants, Move 6. Swords with Reach 1 and 2. 10 yards apart.

If combatant 2 goes first and closes to 5 yards. Then, the 1st combatant chooses the wait maneuver and chooses to step/attack when combatant 2 gets within 3 yards of them.

turn 2: Combatant 2 begins to close the distance again. At 3 yards distant, Combatant 1 step and attacks. They hit and do seven points of damage. Combatant 2 failed to defend. Combatant 2 did retreat 1 yard backwards and is now 3 yards away again. Can they still step and attack since they've not acted yet?

Any help is appreciated.