GBP/JPY plunges to 142.00 neighbourhood ahead of BOE

Having posted a session high near mid-143.00s, the GBP/JPY cross ran through fresh offers and plunged closer to 142.00 handle ahead of BoE.

Currently trading around 142.25 region, spot remained under intense selling pressure and accelerated the reversal move from daily peaks, triggered by slight disappointment from UK construction PMI, as traders seemed to readjust their positions ahead of the key event risk - BoE's Super Thursday. 

Moreover, the prevalent risk-off mood, as depicted by weakness in European equity markets, also prompted investors to boost the Japanese Yen's safe-haven demand and collaborated to the pair's sharp slide in the past hour or so. 

Investors’ attention on Thursday will remain glued to the release of BoE's Quarterly Inflation Report, where the central bank is expected to upgrade its growth and inflation forecasts against the backdrop of recent UK economic data. On the monetary policy front, the central bank is widely expected to maintain status-quo. 

Meanwhile, the broader market risk sentiment would also contribute towards deriving the pair's momentum on Thursday. 

Technical levels to watch

On a sustained weakness below 142.00 handle, leading to a subsequent drop below 141.80 support, would turn the cross vulnerable to break below 141.00 round figure mark and head back towards 200-day SMA support near 140.50 region.

Conversely, rebound from current support level, and a follow through recovery above 142.80-85 resistance area, might trigger a short-covering rally towards 143.65-70 horizontal resistance, en-route 144.00 handle (yesterday's high).