Rate falls back to open Asia but rallies to trade better on the day after MPC Blanchflower comments fail to depress the rate; light stops seen on the move over the 1.3700 area as late shorts get squeezed. Aggressive bids seen and the rate recovers as New York puts on weight.

Two-way action continues suggesting that shorts are aggressively adding and longs are trying to find a bottom with shorts losing this morning. Stops and aggressive selling drive the rate to a 23.0 year low last week. Short-squeeze likely in progress after first attempt to rally was sold back but recovers. Overnight economic news seen as neutral to bearish; rate trading on technical's now.

Signs of the bottom may be showing up as "smart" buyers reported in GBP Wednesday and Thursday night last week. Spillover from EURO likely but modest. Look for two-way action into this bottom. A short-covering rally is increasingly likely now. Late sellers likely in or hurting.

GBP USD Daily

• Resistance 3: 1.4010/20
• Resistance 2: 1.3950
• Resistance 1: 1.3880
• Latest New York: 1.3962
• Support 1: 1.3550
• Support 2: 1.3500/10
• Support 3: ?

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

• 6:00am GBP CBI Realized Sales

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