GBP/JPY trims early strong gains, still holding above 200-DMA

The GBP/JPY cross trimmed some of the early strong gains and retreated around 60-pips from session tops, albeit has managed to hold in positive territory for the second consecutive day.

The cross built on Friday's recovery move from 7-week lows and even shrugged off today's upbeat release of prelim Japanese Q2 GDP report. The upside momentum, however, fizzled out just ahead of the 143.00 handle amid a lack of any strong follow through GBP buying interest, which continues to be weighed down by the latest BoE monetary policy decision and last week's mixed UK macro data. 

Despite the pullback, the cross has managed to hold its neck above the 142.00 handle and the very important 200-day SMA support amid a fresh wave of global risk aversion trade, which is seen weighing on the Japanese Yen's safe-haven appeal. 

In absence of any major market moving economic releases, the cross remains at the mercy of broader market risk sentiment ahead of this week's important UK macro releases, including the latest CPI print and monthly employment details.

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Technical levels to watch

Weakness back below the 142.00-141.95 region (200-day SMA), leading to a subsequent break below 141.60 support, might turn the cross vulnerable to extend its near-term downward trajectory towards the 141.00 handle, en-route its next major support near 140.65-60 zone.

On the flip side, momentum above session tops resistance near 142.70-75 area might trigger a short-covering rally and lift the cross beyond the 143.00 handle towards its next supply zone near 143.30 level ahead of the 144.00 round figure mark.