The Cable has been in a rapid decline since falling through our 2nd tier uptrend as investors rush towards the Dollar for safety. The GBP/USD is finding near-term stability on our medium-term downtrend line in an effort to avoid retesting the key 1.40 level.

Investors panicked on Friday after Britain's Current Account plummeted and Final GDP came in a basis point below analyst expectations. The Current Account numbers were the largest cause for concern.

Not only did the Current Account come in near 1.8 Billion Pounds below expectations, but the announcement was coupled with a downward revision in last quarter's release. Despite the negative reaction from investors, QI09's release shows encouraging improvement from QIII08.

However, the combination of disappointing data from Britain and discouraging news from the EU was enough to cool the optimism developed over the last week. In fact, both the Euro and Pound have surrendered nearly all of the post-U. S. quantitative easing gains.

The Euro still holds the upper hand over the Pound as shown by the relative strength of the EUR/GBP. The BOE has already committed to a near-zero benchmark rate coupled with quantitative easing while the ECB has managed to resist the temptation of extreme liquidity.

Therefore, the Cable should continue to experience comparatively large contractions during shifts to the downside. Britain will release its GfK Consumer Confidence number today. Analysts are looking for no change from February's release.

Fundamentally, we find resistance of 1.4208 with additional resistances hanging at 1.4240, 1.4283, and 1.4326. The 1.45 area will serve as a psychological barrier with 1.40 acting as a highly psychological cushion.

To the downside, we see supports of 1.4159, 1.4100, 1.4045, and 1.3981. The GBP/USD is currently exchanging at 1.4194.

Copyright 2009 FastBrokers, Latest Forex News and Analysis for Forex, Bullion and Commodity Traders.  

Disclaimer: For information purposes only. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained. There is a substantial risk of loss in trading futures and foreign exchange.