The Cable is stabilizing from the psychological 1.40 area and is rising back above our 1st tier downtrend line.  Therefore, we could see some solid near-term gains with a retest of our 2nd tier downtrend line.  The strength of the Cable comes on the heels of a better than expected Services PMI. 

Furthermore, the S&P futures are fighting to stabilize around 700, which in turn is edging the GBP/USD back into the bottom-end of the February trading range.  Don't forget a strong positive correlation exists between the Cable and U.S. equities due to Britain's heavy reliance on the financial sector for GDP growth.

However, despite the present stabilization of the Cable, the downtrend remains largely intact.  It will take a seismic fundamental shift to alter the course of the GBP/USD.  If the S&P futures can't stabilize at 700 and a sharp selloff ensues, expect the Cable to follow suit.

Fundamentally, we maintain our resistances of 1.4119, 1.4173, and 1.4219 with fresh top-end resistance of 1.4292.  To the downside, our 1.4078 resistance turns support while we hold our supports of 1.4023, 1.3964, and 1.3905.

The 1.45 level still serves as a psychological barrier to the upside with 1.40 serving as a cushion to the downside.  The GBP/USD is currently exchanging at 1.4094.

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