GBP/JPY climbs further beyond 138.00 handle, closer to 1-1/2 week tops

The GBP/JPY cross jumped back above the 138.00 handle in the last hour, with bulls now awaiting a follow-through move beyond 1-1/2 week tops set in the previous session.

The cross failed to sustain/build on its weekly bullish gap on Monday and witnessed a sharp intraday pullback following the disappointing release of UK macro data - more importantly, an unexpected GDP contraction for the second consecutive month in April.

However, the prevailing risk-on environment continued weighing on the Japanese Yen's safe-haven status and helped the cross to regain positive traction on Tuesday. Meanwhile, the British Pound picked up the pace following the release of better-than-expected UK average earnings growth data. 

The positive momentum got an additional boost in the wake of hawkish comments by BoE MPC member - Michael Saunders, reiterating that the UK could see more rate hikes and at a faster rate than the curve implies if Brexit is smooth.

It, however, remains to be seen if bulls are able to capitalize on the positive move or the cross once again fizzles out at higher levels amid expectations that a hard-line Brexiteer could be the next British PM and could lead to a no-deal split.

Technical levels to watch