GBP/JPY extends recovery from the lows, remains below 150.00

The GBP/JPY is trading above 149.00 after reaching a high of 149.88, a rise from the lows of 147.97 recorded in earlier. US inflation data came out above expectations. Core CPI rose by 1.8% y/y, above 1.7% that was expected. Other inflation data all came out above expectations. An elevated level of inflation implies a faster pace of rate hikes in the US. Stock futures reacted negatively to the report sending the US dollar and the Japanse yen to higher ground. 

The fear receded later on as stocks opened with modest drops and then turned positive. A consequent drop in the VIX volatility index also helped improve the mood. The USD/JPY stabilized while the GBP/USD moved quickly higher. The result is a recovery in the GBP/JPY cross.

In the UK, Foreign Secretary Boris Johnson called for moving forward with Brexit. Further speeches related to Britain's exit from the European Union are due in the next few days. In Japan, GDP came out at 0.1% q/q, slightly below 0.2% that was forecast. 

GBP/JPY technical picture

The GBP/JPY temporarily dropped below the double-bottom of 148.90 but recovered quickly. It made an attempt to move above the downtrend channel as shown on the 30-minute chart but retreated. 

The RSI is in positive territory but not in the overbought ground. The indicator touched oversold territory before rebounding. Momentum has turned positive. 

Looking up, resistance awaits at 149.85 that capped the cross earlier on. Further above, 150.75 is another level to watch after it held the pair down earlier in the week. 

On the downside, 148.90 remains relevant as a line of support. It is followed by 148.65 where the pair bounced from earlier this week and 148, today's swing low is another notable line.