Yesterday, we wrote that the British Pound was positioned “at the bottom of a multi-year bullish channel that has guided the pair since 1999. A daily close below 09/11 low at 1.7444 would signal a bearish breakout from this trend, but a bullish bounce may be equally in the cards with the interest rate outlook now seeing some easing on the part of the US Federal Reserve.” Today, we see the pair has indeed produced a bearish close at 1.7442, below the level we had noted. That said, we will not enter short at this juncture. We see the next level of support at 1.7046, the 11/28/2005 low. We reckon that a stop-loss for a position targeting this level from current positioning would reasonably need to be placed above 1.7837, the 10/03 wick high. With current positioning at about 1.7470, this means taking a risk of about 380 pips to gain 424, a nearly 1:1 risk to reward ratio. We do not see this as a favorable set-up, but see it as imprudent to set the stop-loss closer given current market volatility. While we see the long-term bias for GBPUSD as bearish, the violent US dollar appreciation of recent days has the potential to correct just as rapidly because the magnitude of the move appears to owe to panic rather than economic fundamentals. To that effect, we will remain on the sidelines looking for the pair to offer a better entry opportunity. For more on GBPUSD and analysis on the other major currency pairs, please see the complete Candlestick Weekly Report.