GBP/JPY recovers swiftly, back around 138.00 level

A sudden spurt of buying interest seems to have emerged around the British Pound, with the GBP/JPY cross now recovering over 200-pips from session low to currently trade around 138.00 handle.

Earlier during the day, the cross dropped below 136.00 level on looming uncertainty surrounding the implication of the historic Brexit referendum, shrugging of disappointing Japanese monthly retail sales data for the month of May. A fresh wave of global risk-on rally dented the safe-haven appeal for the Japanese currency and is also assisting the British Pound to regain some lost ground after being hammered on an unexpected outcome from last week's Brexit referendum.

Meanwhile, slightly better reading from UK Nationwide HPI for, which although doesn't seem to be of much relevance after the Brexit fiasco is boosting some bullish sentiment surrounding the British Pound. Investors now look forward to the closing statements following a two-day summit of the Euro-zone leaders.

Technical levels to watch

Sustained momentum above 138.00 now seems to extend the recovery towards 139.50-60 region, marking 23.6% Fibonacci retracement level of Brexit led sharp slide. A strong follow through buying interest could further boost the pair beyond 140.00 psychological mark resistance, towards testing its next major resistance near 143.40-50 region, coinciding with 38.2% Fibonacci retracement level. 

On the flip side, reversal from current levels and a subsequent drop below 137.20-10 immediate support (nearing 137.00 round figure mark) seems to drag the pair back towards session low support around 135.80 region. Weakening momentum below session low support might now make it vulnerable to drop back towards retesting a multi-year low support near 133.30-20 region, touched on Friday last week.