MVK,
It sounds like your speedo cable is binding a bit. At slow speeds you'd see the needle flucuate as the cable binds then releases the extra energy. At higher speeds the binding is relatively less significant and it smooths out. Done any work on the instrument cluster recently? I'd check behind there and under the dash to make sure the cable is clear and not bent too much. Also while you're at it try putting some graphite down the cable. Avoid oil because it can get dirty and cause the binding to get worse. I had luck once actually pulling the inner cable out from the instrument end, cleaning it and reinserting it. If there is any sign of wear or fraying you'll need to replace it. A good speedo shop can make one cheaply if you give them an old inner cable. When you take it out it will be dirty so watch your interior, also you'll need to twist it some to get it back in all the way. I'll bet that will solve your problem. Good luck.

LRG

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LRG
1987 300D Turbo 175K
2006 Toyota Prius, efficent but no soul
1985 300 TDT(130K miles of trouble free motoring)now sold