GBP/JPY holds near-term trading range, awaits BOE for fresh impetus

The GBP/JPY cross maintained its near-term range-bound movement and once again failed to sustain its strength above 135.00 handle to currently trade with minor losses around 134.80-75 band.

After last week's sharp slide on the back of disappointment from BOJ, the cross is seen consolidating around 135.00 psychological mark. The pair would now take fresh impetus from the much awaited BOE monetary policy decision, later during European trading session.

Markets are broadly expecting the central bank to announce a 25 bps rate-cut, which already seems to be priced-in and hence, would focus on the accompanying quarterly inflation report for possibilities of any further monetary easing in the near-future.

From technical perspective, the pair is forming a symmetrical triangular pattern on hourly chart, which if considered in conjunction with last week's slide, constitutes towards formation of a bearish continuation pattern, pennant. Moreover, the pair has been oscillating within a short-term descending trend-channel formation, suggesting that the near-term downfall might still have some steam left. 

Technical levels to watch

Sustained weakness below symmetrical triangle support near 134.60-50 area seems to drag the pair immediately towards 133.90 (August 2 swing low) before extending its slide further towards 133.00 handle and eventually towards trend-channel support near 132.00 round figure mark.

On the flip side, 135.35-40 zone now seems to act as immediate resistance, which if cleared might negate the bearish pennant formation and assist the pair immediately towards 136.26 (August 1 high) ahead of the descending trend-channel resistance near 136.35-40 region.