Reversal after the fix as stocks lose ground, stops hunted to the upside. Bids around the 1.9660 area from “large names” cushioning the break; rally clears a lot of weak shorts as the week starts. Traders expect GBP to track EURO this week. Low prints at 1.9660 area attracted some short-covering.

Traders now expect a top to form as the rate had thinner volume on the rally into the reported option defense last week and overnight. Rate fails at high prints near previous resistance so a correction is still developing. Spillover weakness/strength from EURO still likely all week this week.  Continue to expect a lot of cross-trading. G-8 data may create some whipsaw again.     

GBP/USD daily

Resistance 3:  1.9900
Resistance 2:  1.9850
Resistance 1:  1.9820/30
Latest New York: 1.9763
Support 1:  1.9650/60
Support 2:  1.9600
Support 3:  1.9550

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

7:01pm GBP Consumer Confidence Index
Tentative GBP Halifax HPI m/m
4:30am GBP DCLG HPI y/y