Having broken and held above the 1.5660 level and put in a temporary bottom at the 1.5344 level, GBP is building on that strength. We have also been watching GBP on the crosses and have seen GBPJPY and GBPCHF strengthening as well. This is further evidence that the pair has more upside to go with its present breakout. Our minimum upside target stands at the 1.5906 level, its Dec 14'10 high where the pair may face the bears on an initial test. Conversely, if a decisive penetration of that level occurs, we should see the pair targeting its Nov 19'10 high at 1.6091 followed by the 1.6296 level, its Nov 04'2010 high. Its daily stochastics is bullish and pointing higher supporting this view. To annul our upside view, the pair will have to break and hold below the 1.5344 level. This will resume its short term weakness and turn focus to its Sept 2010 low at 1.5296 and subsequently its psycho level at 1.5000. All in all, having bottomed out at the 1.5344 level and triggered a strong recovery, further upside risk is expected.

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