Rate falls back on cross-spreading reverses and fears of a large rate cut loom over traders; rate continues to correct into buy zone. Stops noted on the move lower during the day suggesting some bid interest is early. Traders note unwinding of Yen cross-spreads driving a lot of trade after the open.

Large range suggests more volatility coming soon. Traders note liquidity is better than last week. Aggressive traders can buy anytime on weakness but expect more whippy action. Two-way action likely to continue.

Confirmed sovereign interest on the dip as semi-officials seen on dips in both EURO and GBP recently; lately middle-east names. Traders expect follow-on selling into Asia and then possibly the bottom.

GBP/USD Daily

Resistance 3:  1.6550
Resistance 2:  1.6480
Resistance 1:  1.6400
Latest New York: 1.5835
Support 1:  1.5775
Support 2:  1.5700
Support 3:  1.5650/60

Data due Tuesday: All times EASTERN (-5 GMT)

4:30am GBP Construction PMI
7:01pm GBP Nationwide Consumer Confidence

Forex Analysis by Jason Alan Jankovsky at ForexPros.com. For more details about Forex Trading and Tips for decent earnings through Forex Trading, Please check http://www.forexpros.com