GBP/JPY eases from three-day tops, still well bid above mid-151.00s

• The risk-on mood undermined the safe-haven JPY and assisted GBP/JPY to gain traction on Friday.
• Disappointing UK Retail Sales acted as a headwind for the GBP and kept a lid on any further gains.

The GBP/JPY cross maintained its bid tone through the first half of the European session, albeit retreated around 30 pips from three day tops. The cross was last seen trading just above mid-151.00s, over 0.10% for the day.

Having shown resilience below the 151.00 mark over the past two trading sessions, the GBP/JPY cross gained some positive traction on Friday and moved away from multi-week lows touched on Wednesday. The prevalent risk-on environment continued weighing on the safe-haven Japanese yen, which, in turn, was seen as a key factor that provided a modest lift to the cross.

The JPY was further pressured by the Japanese government's move to cut its economic view for the first time in four months on Thursday. That said, disappointing UK Retail Sales data released earlier this Friday acted as a headwind for the British pound. This seemed to be the only factor that kept a lid on any further gains for the GBP/JPY cross, at least for the time being.

Hence, it will be prudent to wait for some strong follow-through buying before confirming that the GBP/JPY cross has bottomed out in the near term and positioning for any further appreciating move. From current levels, any subsequent move beyond the daily swing highs could meet with some fresh supply near the 152.00 mark and remain capped near the 152.25-30 supply zone.

Technical levels to watch