Early in the American Session, the British pound is trading around 1.2705 above the 200 EMA and above the 21 SMA. On the H1 chart we can see that the British pound managed to bounce above the 200 EMA around 1.2627, since then we can see a recovery of the pair, and it is likely to continue rising until it reaches the daily resistance of 1.2735 and 1.2761.
The British pound could continue to rise until it reaches the key area around 1.2765. This level coincides with the top of the downtrend channel and in case the pound fails to break it, we could expect technical correction, and it could fall back towards the 1.2660 area and even down to 1.2625 (bottom of the downtrend channel).
On December 18, the Eagle indicator reached the extreme oversold zone, and since then has been giving positive signals. At current price levels, there are buying opportunities until the pound reaches the resistance areas around 1.2735 or 1.2765. If GBP/USD loses momentum and consolidates below 1.2765 then it could fall and, it would be seen as an opportunity to resume selling.
If bullish strength prevails the British pound could reach +1/8 Murray located at 1.2817. This area represents a strong extreme overbought level which as long as the pound approaches this level will be seen as an opportunity to sell.