Rate drops back after an up week last week; likely a correction and a buying opportunity as the 23 year lows are very likely to hold. Last week's Blanchflower comments help underscore the rate on dips but that support didn't show this morning.

Possibly unwinding of GBP crosses pressuring the rate above the 1.4300 handle. Light stops seen on the move under 1.4250 with likely active selling dropping into new lows at this writing. Two-way action continues suggesting that shorts are aggressively adding and longs are trying to find a bottom. Short-squeeze taking a break; need sharp rally after this dip to argue for continued upside.

Rate trading on technical's now. Signs of the bottom may be showing up as "smart" buyers reported in GBP 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: 1.4250
Resistance 2: 1.4180
Resistance 1: 1.4100
Latest New York: 1.4077
Support 1: 1.3980
Support 2: 1.3920
Support 3: 1.3880

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

4:30am GBP Construction PMI

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