Rate rallies hard as stocks wilt, cross spreading also noted. Sovereign interest under the 1.7850 area this morning lifted into stops above the 1.8100 area. In my view, the GBP has weathered the storm fairly well and it suggests no additional down move near-term.

Cross spreaders seen active on the sell side but volumes lighter. OK to buy the rate the next 24 hours and I would look for a dip under the 1.7830 area for the buy but that looks unlikely after the rally today. 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. Short-covering rally may be over due to sharpness of the move.

Close back above the 1.8100 area likely turns the rate positive. 

GBP/USD Daily

Resistance 3:  1.8350
Resistance 2:  1.8300/10
Resistance 1:  1.8250
Latest New York: 1.8196
Support 1:  1.7730
Support 2:  1.7620/30
Support 3:  1.7580

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

4:00am GBP MPC Member Dale Speaks
4:30am GBP Retail Sales m/m
4:30am GBP M4 Money Supply m/m
4:30am GBP Public Sector Net Borrowing

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