GBPUSD: Price Collapse Turns Risk Lower

GBPUSD-The inability of the pair to sustain its recovery higher and its subsequent failure at the 1.6694 level saw it collapsing the past week through key supports at the 1.6466 and 1.6411 levels, its Sept 23'09 high/channel breakout point. GBP is now back into its falling channel (clearly seen on the daily chart)earlier invalidated the past week(Wednesday) and has printed a rejection candle following that sell off. We believe that further risk remains to the downside and GBP should push lower towards its Sept 30'09 high at 1.6124 where a break will create scope for further weakness towards the 1.5708 level printed on Oct 13'09. Below there will trigger the resumption of its short term downtrend. On the other hand, GBP must close above the 1.6694 level to avert its current downside threats and bring further upside towards the 1.6740 level, its Sept 11'09 high with an eventual loss of there setting the stage for a retarget of its YTD high at 1.7041. Beyond the latter will activate the resumption of its medium term uptrend on hold since Aug'09. From what the charts are showing there are more downside evidence than upside at the current price levels. Onthe whole, while GBP trades within its falling channel, risk remains to the downside with eyes on its short term downtrend resumption.