GBP/JPY firmer above 127.00 amid broad GBP rally

The GBP bulls regain poise as we head into early Europe, driving GBP/JPY back above 127 handle, as investors now await the UK CPI data for further momentum.

GBP/JPY tracks GBP/USD higher

Currently, GBP/JPY rallies +0.40% to 127.10, eyeing a test of the Asian spike to 127.40 levels. The GBP/JPY remains strongly bid amid a risk-friendly market environment, which continues to underpin the demand for higher-yielding currencies such as the GBP.

Moreover, easing concerns of Brexit hard-landing, following successful launch of free-trade deal between Britain and New Zealand, also rescued the bulls from the recent downward spiral.

Further, a recovery in the USD/JPY pair back towards 104 handle also collaborated to the upbeat momentum behind GBP/JPY. Data-wise, the GBP traders look forward to the UK CPI report, while the US inflation report will be also closely eyed for fresh incentives on the cross.

GBP/JPY Levels to consider 

The pair has an immediate resistance at 127.40 (daily high), above which 127.96 (Oct 14 high) could be tested. On the flip side, support is seen at 126.75 (daily low) that at 126.15 (daily S1).