GBP/JPY faces double whammy, smashed to 136.70

Broad based yen buying combined with fresh sell-off in the cable, sent the cross in the GBP/JPY almost 250-pips lower in the Asian trades this Tuesday.

GBP/JPY retests 137 handle 

Currently, GBP/JPY sinks -1.42% to 137.06, quickly bouncing-off a sharp dip to 136.70, fresh eight-day lows. The GBP/JPY cross remains deep in the red as we head into early Europe. However, the bears appear to take a breather from the aggressive selling, allowing a minor-recovery in the cross back on 137 handle.

The cross came under heavy selling pressure largely back by yen’s relative strength in response to growing uncertainty around the potential Japanese stimulus package, with markets now pricing-in a shrinking package than previously thought.

While on GBP-side of the equation, BOE member Weale’s push towards immediate stimulus as soon as August, weighed dramatically on the pound across the board, and thus, added to the sell-off in GBP/JPY.

Markets now turn their attention towards tomorrow’s UK GDP and US durable goods data ahead of the FOMC decision for fresh direction in the cross.

GBP/JPY Levels to consider 

The pair has an immediate resistance at 138 (round number), above which 138.91 (5-DMA) would be tested. On the flip side, support is seen at 136.70 (daily low & 20-DMA) that at 136.