The British Pound extended UK CPI-led downslide, with the GBP/JPY cross falling over 100-pips from session tops near 147.30-35 region.
The cross came under intense selling pressure after data released from the UK showed the annual rate of inflation, as measured by CPI eased to 2.6% in June as compared to 2.9% rise recorded in May. The reading was well below consensus estimates and marked its first decline since October last year.
An unexpected drop in the inflationary pressure was seen as easing pressure on the Bank of England to raise interest rates, amid concerns of inflation overshoot, and prompted investors to lighten their bullish GBP bets.
Meanwhile, the prevalent risk-off environment was seen extending support to the Japanese Yen's safe-haven appeal and further collaborated to the pair's sharp retracement to the 146.00 handle.
With today's fall, the cross has now retreated over 150-pips from yesterday's swing highs near the 147.60 level as investors now shift their focus to the BOE Governor Mark Carney's speech, where his remarks on the central bank's monetary policy outlook could trigger a fresh bout of volatility across GBP crosses.
Technical levels to watch
Immediate support is pegged near 145.75-70 area, below which the fall could get extended back towards 145.25 level (July 12 low) en-route the key 145.00 psychological mark. On the upside, any recovery attempts might now confront some fresh supply near the 146.60 region, which if cleared has the potential to lift the cross back beyond the 147.00 handle towards an important hurdle near 147.40-45 region.
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