GBP/JPY erases prior session's recovery gains, back below 140.00 handle

After yesterday's rebound from the very important 200-day SMA, the GBP/JPY cross ran through fresh offers on Tuesday and has drifted back below 140.00 psychological mark.

Currently trading around 139.65-70 band, testing session lows, the cross erased all of its prior session's tepid recovery gains amid follow through selling pressure around the British Pound in wake of renewed fears of another Scottish independence referendum. Adding to this, an offered tone around the USD/JPY major, possibly due to month end Yen demand, also collaborated to the GBP/JPY pair's slide back closer to three-week lows touched yesterday.

Looking at the technical picture, the cross has been drifting lower alongside a descending trend-line resistance. Hence, a decisive break below 200-day SMA support near 139.00 round figure mark would confirm a break-down and turn the cross vulnerable to extend its near-term downward trajectory. 

With an empty UK economic docket, broader market risk sentiment and fresh news / developments around the Scottish referendum news would derive the Japanese Yen's safe-haven demand and provide some fresh impetus for the cross.

Technical levels to watch

Weakness below 139.40 level is likely to get extended towards 139.00 handle (200-day SMA), below which the cross seems all set to head towards 138.55 level (Feb. 7 low) ahead of 138.00 round figure mark. On the flip side, recovery back above 140.00 mark, leading to a subsequent strength above 140.30-35 area, is likely to trigger a short-covering rally towards 141.00 handle, en-route the descending trend-line resistance near 141.70-75 region.