(MENAFN- Daily Forex)

• The British pound drifted a little bit lower during the trading session on Monday, as we continue to see the US dollar put up a fight against most currencies. This is a particularly interesting currency pair for me due to the fact that the British pound has been resilient against the United States dollar in comparison to multiple other currency such as the euro, Canadian dollar, and many others.
• With that being the case, I watch this pair closely due to the fact that it can give us an idea as to what could happen with the US dollar. Quite frankly, the British pound really starts to struggle against the US dollar, I anticipate that most of those other currencies will get absolutely annihilated. It isn't necessarily that I would short this pair, it's just that I use it as an indicator as to how the US dollar might be doing. It is just one tool in a major toolbox that I've been using as of late.

200 Day EMA

The 200 Day EMA sits at the 1.3266 level, offering a significant amount of technical support, but it's also worth noting that the overall trajectory of the market has been a series of“lower highs, and lower lows” since the FOMC Press Conference a few weeks ago. In other words, as we were told the US dollar was going to fall apart, it started to rally. I'm starting to hear a lot of the same theories from most of the retail side at the moment, suggesting that the US dollar has“topped out and is going to lose the world's reserve currency status.” This is the same thing I hear every time we start to see the US dollar bottom, and it is worth noting that we are 400 pips lower than the peak.

This is not to say that we have to break down from here, just that it's an observation that the market isn't going what everybody expected. Quite frankly, that's pretty typical and therefore I'm not surprised. I look at rallies at short-term selling opportunities in this market, and if we break down below the 200 Day EMA, I will become especially interested.

Potential signal: I would be a seller of the GBP/USD pair below the 200 Day EMA with a stop loss at the 1.3350 level.

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