Rate explodes to the upside and runs all bids out; falls back to open lower in New York. Buy dips is the preferred strategy in my view. Cross spreaders seen active on the sell side but volumes lighter.

Rate two-way but firm on dips; traders note bids still absorbing offers on the breaks. Traders note stops mixed with offers above the market also. Major support has held last Friday, any weakness likely to be bought hard. Profit-taking bids continue as well. Hook reversal from the toolbox still valid. Price drop today likely over-extended on sympathy selling from EURO. Drop is drawing profit-taking bids suggesting the bottom is finally trying to form near-term.

Short-covering rally may be over due to sharpness of the move. Likely an exhaustion drop. Close back above the 1.7780 area needed to take some of the pressure off.

GBP/USD Daily

Resistance 3:  1.8400
Resistance 2:  1.8130
Resistance 1:  1.7950
Latest New York: 1.7801
Support 1:  1.7680
Support 2:  1.7550
Support 3:  1.7420

Data due Tuesday: All times EASTERN (-4 GMT)

4:30am GBP CPI y/y
4:30am GBP Core CPI y/y
4:30am GBP DCLG HPI y/y
4:30am GBP RPI y/y
Tentative GBP BOE Inflation Letter

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