GBP/JPY trying to build on intraday sharp recovery of over 100-pips

   •  Short-covering helps stage a solid rebound from over 3-week lows.
   •  Additional gains remain capped amid global risk aversion trade.
   •  Investors start repositioning for BOE’s Super Thursday.

The GBP/JPY cross staged a solid rebound from over 3-week lows and refreshed session tops in the last hour, albeit quickly retreated few pips thereafter.

The cross caught some strong bids near the 151.20 region and witnessed a sharp intraday recovery of over 130-pips. The rebound was not backed any fresh fundamental development and hence, could be attributed to some short-covering, especially after the latest leg of the downfall of over 500-pips since last Friday. 

The up-move, however, lacked any strong follow-through traction amid the ongoing rout in global equity markets. The global flight to safety was underpinning the Japanese Yen's safe-haven appeal and eventually kept a lid on any additional gains, at least for the time being. 

It would now be interesting to see if the cross is able to register any meaningful recovery or bears regain control as investors start repositioning for BOE's Super Thursday.

Technical levels to watch

A sustained recovery beyond mid-152.00s is likely to lift the pair beyond the 153.00 handle towards its next resistance near the 153.40 region. On the flip side, weakness back below the 152.00 handle, leading to a subsequent break below 151.75 level, might turn the cross vulnerable to head back towards challenging the 151.00 round figure mark.