Despite sharp drop during holiday trade the rate is attracting bids from larger names traders say; price drop likely over-extended on sympathy selling from EURO. Oil no doubt helping to drive trade but rate is becoming severely oversold. Overnight volumes lighter traders say; cross-spreaders active in Sterling and EURO.

Drop is drawing profit-taking bids suggesting the bottom is finally trying to form near-term. Overdue for a short-covering rally. Likely an exhaustion drop. Close back above the 1.8020 area needed to take some of the pressure off. This stop-driven break is likely a head fake in my view.

Traders expect GBP to track EURO through this week. Continue to expect a lot of cross-trading.

GBP/USD Daily

Resistance 3:  1.8120/30
Resistance 2:  1.8080
Resistance 1:  1.8000/10
Latest New York: 1.7830
Support 1:  1.7780
Support 2:  1.7740/50
Support 3:  1.7720

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

Tentative GBP Halifax HPI m/m
4:30am GBP Services PMI
5:30am GBP BRC Shop Price Index y/y

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