The British pound is trading around 1.2851, above the 200 EMA, and above the 5/8 Murray. However, it has found resistance around the top of the downtrend channel and is now consolidating. This makes us think that a strong breakout could occur in the next few hours if GBP/USD consolidates above 1.2863 (21 SMA).
Yesterday during the American session, the British pound recovered part of the losses after bouncing from the low of 1.2806, which makes us think that GBP/USD could be preparing for a bullish sequence since we observe that it is technically oversold.
If there is a sharp breakout of the downtrend channel and a consolidation above 1.2863 on the H4 chart, it will be seen as an opportunity to buy with targets at 1.2939, 1.3025 and finally, at 1.3047.
On the other hand, if the British pound lacks the strength to continue rising, we could sell, as a technical correction could occur and the bearish cycle could resume. As long as the British pound remains below 1.2863, it will be seen as a signal to sell with targets at 1.2817 and eventually, at 1.2776.