Rate falls back after recovery to trade flat; likely to pullback to support around the 1.7380 area for a buy point. Cross-spreading liquidation likely supporting the rate but two-way action adding to volatility.

New Lows around the 1.6800 area likely to draw additional bids and will likely hold on further weakness, traders note quality bids on the dip suggesting a bottom is in here somewhere. A solid close over the 1.7300 handle will likely help the longs. Aggressive traders can look to the buy side again on any dip the next day or so. Volumes lighter after the open. Follow-on selling likely to attract short-covering on further weakness. Follow-on selling likely from technical's but spillover strength from EURO likely to be better to end the week.

Look for a recovery back to the 1.8000 handle near term; two-way action likely to continue. Possible sovereign interest on the dip as semi-officials seen on dips in both EURO and GBP recently. Some stops triggered along with active selling; traders note profit-taking bids. Traders report cross-spreading for Sterling crosses likely driving the rate near-term.

GBP/USD Daily

Resistance 3:  1.7720
Resistance 2:  1.7680
Resistance 1:  1.7630/40
Latest New York: 1.7438
Support 1:  1.7440
Support 2:  1.7380
Support 3:  1.7300
 
Data due Wednesday: All times EASTERN (-4 GMT)

4:30am GBP Claimant Count Change
4:30am GBP Average Earnings Index y/y
4:30am GBP Unemployment Rate

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