The GBP/USD has had a long period of consolidation so far this year and it has been mainly fluctuating between 1.40 and 1.50. However after falling sharply today it is not far away from the critical level of 1.3845 (it has just dropped below 1.40 at the time of writing).

The Supertrend indicator recently turned positive on February 8 for the first time since October 1 last year, however it could easily turn red again if the current weakness continues.

As I say the level to watch out for is 1.3845. If it closes below this figure then this reliable indicator will once again turn red and I think with all the doom and gloom currently surrounding the British economy in particular, we could easily see a sustained downwards move to at least 1.30.

My gut feeling is that we probably won't break through this level just yet, but if we do then there will be some excellent opportunities to short the GBP/USD pair in the coming weeks.