GBPUSD: Despite the pair's current strength in early trading today as long as it holds below the 1.6234/39 levels we see risk towards its key support located at the 1.5830 level, its Dec 30'09. Below the latter level will set the stage for the resumption of its declines activated off the 1.6875 level towards the 1.5706 level, its Oct 13'09 low. A sustained break below there will see a 100% price retracement (from 1.5706- 1.6875 levels) and open the door for additional downside towards its .50 Ret (1.3501-1.7041 rally) at 1.5273. Its daily RSI is bearish and pointing lower suggesting further downside. To reverse its current downside vulnerability, GBP will have to decisively overcome the 1.6234/39 level, its Dec 31'09/Jan 04'10 highs and then resume its recovery initiated at the 1.5830 level towards the 1.6409 level, its Dec 16'09 high where a break will expose its Nov 25'09 high at 1.6744 and then the 1.6875 level, its Nov 16'0-09 high. These levels should provide strong resistance if seen and possibly turn the pair back down. Overall, GBP remains vulnerable to the downside towards the 1.5830 level.

Daily

Daily Chart: GBPUSD