FXstreet.com (Barcelona) - The Pound rallied during early European session extending gains above 1.6530 resistance after having bounced at 1.6470 Asian session low, although the pair was capped at 1.6568 by a weaker then expected retail sales report,to drop to 1.6490; at the moment, the Pound trades at 1.6535.

For the rest of the week, Kenneth Broux, technical analyst at Lloyds TSB Financial Markets sees the Pound on the defensive to explore levels around 1.6400: Weak average earnings, retail sales and public finances stats this week are likely to keep GBP on the defensive with a move in GBP/USD to 1.64 support possibly triggering a retracement towards the late August/early September lows around 1.6115. Weekly IMM positioning data has been quite erratic recently in signalling short-term GBP direction.

At the moment of writing, next resistance levels lie at 1.6550/55 and above here, 1.6610 and 1.6660 (Sept 15 high). Support levels lie at 1.6490, and below here, 1.6400 (Sept 15 low) and 1.6380 (End Aug/Start Sept highs).