GBP/JPY gives up Wednesday’s BoE Haldane-led recovery gains

The GBP/JPY cross came under some renewed selling pressure and has now reversed previous session's recovery gains.

The cross had a volatile session on Wednesday, initially dipped below the key 140.00 psychological mark and then recovered nearly 200-pips on hawkish comments by BoE Chief Economist Andrew Haldane, showing readiness to scale back some of the incremental stimulus later during this year. 

The up-move, however, lacked any follow through momentum and ran through fresh offers on Thursday amid persistent worries over the prospects of a deal between the Conservatives and DUP to allow PM Theresa May to maintain a minority government, despite of a statement from DUP's MP Donaldson.

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Adding to this, a fresh wave of global risk aversion trade, as depicted by weaker sentiment around global equity markets, provided an additional boost to the Japanese Yen's safe-have appeal and further collaborated to the pair's retracement back to mid-140.00s.

With today's slide the cross has now retreated over 100-pips from yesterday's swing lows and hence, a convincing break below the 140.00 handle would confirm continuation of the pair's well-established near-term downward trajectory.

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Technical levels to watch

From current levels, the 140.00 handle is likely to act as immediate support, which if broken is likely to accelerate the slide back towards the 139.00 mark en-route two-month lows support near 138.70-65 region touched on June 12.

On the upside, any recovery attempt now seems to confront immediate resistance near the 141.00 handle, which if cleared might trigger a short-covering bounce back towards the 141.40 intermediate resistance ahead of 141.75-80 resistance (yesterday's swing high).