Sure enough the Cable crumbled after dropping below the psychological 1.40 cushion yet is bouncing off our previous bottom-end of 1.3856. The weakness comes after a slew of negative news concerning Britain.

To get started, the IMF projected the British economy will not turn around until 2011, highlighting the severity of the situation. The Claimant Count Change (CCC) number leaves us speechless. Not only did Britain revise the last CCC number upwards, but today's release is disastrous at best.

The CCC came in at roughly 138,400 compared to analyst estimates of 84,500. Hence, British unemployment is rising at an accelerated rate, blowing past even the worst-case expectations.

Meanwhile, the BOE is proceeding with quantitative easing to fund economic stimulus efforts while maintaining a reasonable interest rate level on government debt. Quantitative easing has proven unsuccessful in the past due to the massive amount of money printing involved.

Therefore, all signs still point towards the downside for the GBP/USD. If March lows can't hold we will surely see a retest of January lows.

Meanwhile the Cable has our 1st tier downtrend line to fall back on and March lows would provide a challenge to the downside. Fundamentally, we find resistances of 1.4047, 1.4112, 1.4156, and 1.4199.

To the downside, we see supports of 1.4008, 1.3957, 1.3910 and 1.3856.

The GBP/USD is currently exchanging at 1.2986.

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