GBP/JPY keeps the red near session lows post UK retail sales, BoE in focus

The GBP/JPY cross failed to move back above the key 140.00 psychological mark and remained under some selling pressure for the second consecutive day.

Spot extended previous session’s reversal move from 141.00 neighborhood and dropped to fresh session lows near 139.25 region after disappointing UK monthly retail sales data, coming-in to show a m-o-m drop of 1.2% in May as compared to an expected fall of 0.8%. 

   •  UK retail sales drop sharply in May, a Big miss on expectations

Against the backdrop of Wednesday's softer wage growth data, weaker retail sales data added to the already weaker sentiment surrounding the British Pound led by prevailing political uncertainty and the impending Brexit negotiations.

The selling pressure, however, remained limited as investors keenly await for the BoE's assessment of the recent political/economic developments and its implication on the economy before committing to the next leg of directional move.

Technical levels to watch

Immediate support is pegged at the 139.00 handle, which if broken decisively has the potential to drag the cross further towards its next support near 138.20-15 region with some intermediate support near mid-138.00s.

On the upside, any recovery move now seems to confront resistance near 139.70-75 region, above which the cross is likely to surpass the 140.00 handle and head towards testing its next resistance near 140.30-35 area.