GBP/JPY - gap filling exercise underway

GBP/JPY gapped higher to 141.89 in early Asia before falling back to 140.60 as the relief rally post French election results is running out of steam.

The Japanese Yen was offered across the board, while the EUR strengthened after Macron and LE Pen won the first round of elections as expected. The drop in the JPY pushed BP/JPY to 141.89.

However, the spike in the EUR/GBP weighed over the British Pound. Furthermore, the initial sell-off in the Japanese Yen was largely on relief that the worst case scenario of Le Pen and Melenchon victory has been avoided.

Thus, GBP/JPY failed to capitalize on the strong open and is now fast losing the attitude. Another 100-pip drop from the current level of 140.60 and the gap will be filled.

Also note, the buying interest in the Pound is likely to remain low, given the data released on Friday showed the UK retail sales suffered the biggest drop in seven years in March.

GBP/JPY Technical Levels

A break below 140.00 (psychological figure) would expose 50-DMA line of 139.32. A daily close below the same would signal bullish invalidation and open up downside towards 138.14 (10-DMA).

On the higher side, breach of resistance at 141.10 (100-DMA) could yield re-test of 141.89 (session high) and 142.17 (Dec 29 low).