GBP/JPY corrects for second day running, moves closer to 160.00 level

After rising above 100-day SMA for the first time since Nov. 2015 to a four-week high level of 162.53, the GBP/JPY pair erased majority of its weekly gains and has now dropped back close to the 160.00 psychological mark.

In the past few weeks, receding fears of 'Brexit' had been the key supportive pillar of strength witnessed across GBP pairs. The GBP/JPY pair enjoyed the dual benefit of the broader GBP strength and global risk-on rally that diminished safe-haven appeal of the Japanese currency.

However, after surging to 4-week high level of 162.53, the pair is witnessing some profit taking move. Moreover, a slight weakness across European and US equity markets seems to support the risk-off sentiment boost for JPY, dragging the GBP/JPY pair lower for second consecutive day.

The pair has now dropped to the vicinity of 160.00 handle, which if broken might extend the near-term corrective move.

Technical levels to watch

Below 160.00 psychological mark support, the pair seems to extend the fall immediately towards previous weekly closing level support near 159.65-60 area. A follow through selling pressure might extend the corrective move further towards this week's low support near 158.00 handle, also coinciding with 50-day SMA.

Meanwhile, day's peak level near 161.40-45 area, also coinciding with 100-day SMA seems to restrict immediate upside for the pair. On a convincing move back above this key resistance, the pair seems to make a fresh attempt to move back towards 4-week high resistance near 162.50 area.