GBP/JPY clings to gains near session tops, just above mid-129.00s

The GBP/JPY cross extended its steady intraday appreciating move and climbed to fresh session tops, further beyond mid-129.00 in the last hour.

The cross caught some fresh bids on Tuesday and built on the previous day's late bounce from the 127.35 region amid a goodish pickup in demand for the British pound. Following the previous day's negative move, the sterling rebounded after the UK Prime Minister Boris Johnson imposed stricter lockdown measures to combat the COVID-19 pandemic.

The positive mood seemed rather unaffected by the mixed release of the flash version of the UK Manufacturing and Services PMI prints for March. In fact, the gauge for the UK services sector dropped to 35.7, showing a sharp contraction in the business activity, but was largely negated by slightly better UK manufacturing sector activity.

Apart from this, a goodish recovery in the global risk-sentiment – as depicted by a strong positive move in the equity markets – undermined the Japanese yen's perceived safe-haven demand and remained supportive of the pair's positive move through the early European session.

It, however, remains to be seen if the cross is able to capitalize on the move or runs out of the steam at higher levels amid persistent worries over the economic fallout from the coronavirus pandemic. Hence, it will be prudent to wait for some strong follow-through buying, possibly beyond the key 130.00 psychological mark, before positioning for any further appreciating move.

Technical levels to watch