GBP/JPY jumps to session tops beyond mid-139.00s, UK CPI in focus

Selling pressure around the British Pound seems to have abated for the time being, helping the GBP/JPY cross to stage a minor recovery and recovery some of its previous session's losses to near two-month lows.

With markets looking past Friday's UK election result, today's disappointing release of BoJ's Business Survey Index for the second quarter of 2017 weighed on the Japanese Yen and prompted bears to lighten their bearish positions.

Adding to this, a slight improvement in investors’ appetite for riskier assets, as depicted by a positive opening in the European equity markets, further dented the Japanese Yen's safe-haven demand and collaborated to the pair's strong recovery move from the lowest level since April 18. 

Currently placed at session tops near 139.65-70 region, traders now look forward to the latest UK inflation figures, due in a short while from now, for some fresh impetus. 

   •  UK: CPI likely unchanged at 2.7% y/y – Danske Bank

Given that the BoE has already showed its readiness to tolerate near-term inflation overshoot, a strong CPI print is unlikely to provide an additional boost to the British Pound. And hence, the current level of up-move runs the risk of witnessing some fresh supply at higher levels amid renewed worries over negotiations on Britain's exit from the European Union.

Apart from today's UK macroeconomic data, investors would also maintain a cautious stance in wake of the key central bank meetings this week - BoJ and BoE on Thursday.

   •  RTRS Poll: GBP likely to fall more in coming months

Technical levels to watch

A follow through momentum beyond the key 140.00 psychological mark, the recovery move could get extended towards 140.40-60 resistance en-route the 141.00 handle. On the flip side, retracement back below mid-139.00s now seems to find strong support near 139.15-10 region, which if broken seems to pave way for continuation of the pair's downward trajectory towards its next support near 138.25-20 zone.