GBP/JPY erases early gains, upside remains capped at 133.00 handle

Having failed to build on to its gains to 133.00 handle, the GBP/JPY cross erased all of its gains and dropped to a fresh session low before retracing few pips to currently trade around mid-133.00s.

Ahead of the Fed Chair Janet Yellen's speech at Jackson Hole symposium, which is expected to provide clues over the timing of next Fed rate-hike action, cautious sentiment around global financial markets is extending support to the perceived safety of Japanese Yen.

Meanwhile, the British Pound failed to attract fresh buying interest despite of in-line with estimates second estimate of UK Q2 GDP print. Nevertheless, the cross still seems to be headed for second consecutive weekly gains. 

Next of relevance would be US GDP print that would provide some impetus to the USD/JPY and the GBP/USD majors and eventually drive the GBP/JPY cross. 

Technical levels to watch

On a sustained weakness below 132.50 level, the cross seems to immediately drift towards 132.00 handle, below which the profit taking move is likely to get extended towards support near 131.30 level. On the upside, bullish momentum back above 133.00 handle should help the pair to build on to its recent recovery gains and lift it towards testing next major resistance near 133.75-80 zone.