GBP/JPY surge past 200-DMA, hits fresh post-Brexit highs

The GBP/JPY cross extended its strong near-term upward trajectory and broke through the very important 200-day SMA resistance to hit a fresh post-Brexit highs.

Currently trading around 144.70 region, the cross caught fresh bids and reversed initial profit-taking slide to session low level of 142.64 after comments from UK Brexit Minister David Davis revived hopes of a soft Brexit and lifted the British Pound across the board. Davis said that Britain would consider making payments to the EU budget in return for access to EU markets and helped negate disappointing release of UK manufacturing PMI.

The cross even ignored the prevalent negative sentiment around European equity markets, with UK's FTSE down over 1.0% for the day, which tends to boost the Japanese Yen's safe-haven appeal and accelerated its up-surge, possibly on the back of fresh bout of short-covering after the cross conqured 200-day SMA important resistance.  

From technical perspective, decisive move above 200-day SMA, for the first time in 2016, clearly points to well established strong bullish momentum and scope for further appreciating move for the cross. However, with daily RSI still in near-term overbought conditions warrant near-term consolidation of a minor pull-back before the next leg of up-move.

Technical levels to watch

From current 145.00 psychological mark is likely to act as immediate resistance, which if cleared should open room for continuation of the upward trajectory towards 147.75-80 resistance area in the near-term. On the downside, 200-day SMA previous resistance, near 144.00-143.80 region, now seem to act as immediate support below which the corrective slide could get extended towards retesting sub-142.00 level.