The Cable followed U. S. equities and the Euro lower yesterday and investor uncertainty returned concerning the state of financials. However, the downward movements of the GBP/USD remain less exaggerated than the EUR/USD due to the consistent improvement in British economic data.

Today's manufacturing and industrial production numbers reiterated this trend, as both came in encouragingly above analyst expectations. Once again the relative strength of the Pound is revealed in the weakness of the EUR/GBP.

It appears as if the EUR/GBP could make a large leg down as the currency pair tests April lows and the psychological .90 level. Consequently, the Cable sits comfortably above our 1st tier uptrend line and its psychological level of 1.45. However, we must insert a note of caution. The GBP/USD failed to breach February highs.

Hence, even though the uptrend is intact, this missed opportunity leaves open the door for the possibility of a retracement into its depressing medium-term downtrend. Ultimately, the trend of the GBP/USD will rely on the performance of U. S. financials.

The financial industry comprises a large portion of Britain's GDP. Therefore, if U. S. banks do in fact encounter a new wave of troubles, British financials would be inextricably impacted and the Cable would have no choice to follow U. S. equities lower.

However, throwing caution to the wind, the uptrend is alive and well and the stance remains to the upside in both the GBP/USD and EUR/USD until we receive some game changing, economically fundamental events.

Fundamentally, we find resistance of 1.4730 with additional resistances hanging at 1.4770, 1.4834, 1.4883 and 1.4946. The 1.50 level serves as a key psychological barrier while the 1.45 area acts as a psychological cushion.

To the downside, we see supports of 1.4676, 1.4612, 1.4571, 1.4538 and 1.4484. The GBP/USD is currently exchanging at 1.4702. .

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