GBP/JPY drops for third straight session, eyes UK inflation data

• GBP/JPY is down for the third straight session, has established another lower high on the daily chart.
• Weaker-than-expected UK inflation data, due tomorrow, could yield deeper losses.

GBP/JPY is down for the third straight session and is currently trading below 149.00, largely due to a drop in the USD/JPY pair.

The Japanese Yen picked up a bid in Asia, tracking the drop in the US 10-year treasury yield to one week low of 3.05 percent. Meanwhile, GBP/USD is trading flat lined just above the 1.34 mark.

The GBP/JPY's decline from 150.00 (May 18 high) to 148.77 (Asian session low) has established another lower high on the daily chart, which indicates the bears have gained strength ahead of tomorrow's UK inflation release.

An above-forecast UK CPI reading could help the oversold GBP/USD regain some poise and hence could yield a rally in the GBP / JPY pair. On the other hand, a weaker-than-expected print would only bolster the impact of the already bearish technical set up in the GBP/JPY pair.

GBP/JPY Technical Levels

As of writing, the pair is trading at 148.84. A close below the 10-day MA of 148.77 would mean the rally from the May 8 low of 147.05 has ended. The support is seen at 148.18 (May 16 low), 147.05 (May 8 low), and 146.97 (Nov. 28 low). Meanwhile, resistance is lined up at 149.36 (200-day MA), 149.84 (50-day MA), and 150.48 (100-day MA).