• Disappointing UK services PMI triggers the initial leg of downfall.
• Reviving safe-haven demand underpins JPY and adds to the pressure.
• Technical studies suggest a continuation of the near-term downfall.
After an initial attempted recovery closer to mid-149.00s, the GBP/JPY cross met with some fresh supply and dropped to fresh one-month lows in the last hour.
The cross drifted into negative territory for the third consecutive session, also marking the fifth day of losses in the previous six, and broke below the very important 200-day SMA support following the weaker-than-expected release of UK services PMI print for April.
With investors looking past yet another disappointing UK economic data, the prevalent strong bid tone surrounding the Japanese Yen, amid reviving safe-haven demand, seems to be one of the key factors behind the pair's latest leg of downfall.
Currently trading near the 148.50 region, the cross has now retreated around 100-pips from session tops, with a follow-through weakness, led by some fresh technical selling below an important moving average support, now looking a distinct possibility.
Technical levels to watch
Any subsequent weakness below 148.40 levels is likely to drag the cross further towards testing sub-148.00 level en-route mid-147.00s. On the upside, any recovery attempts now seem to face some fresh supply near the 149.00 handle (200-DMA), above which the recovery could further get extended back towards reclaiming the key 150.00 psychological mark.
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