GBP/JPY extends overnight recovery move, retakes 143.00 and beyond after UK PMI

The GBP/JPY cross built on previous session's recovery move from one-month lows and managed to move back above the 143.00 handle post UK manufacturing PMI.

Data released just a while ago showed continuous expansion in the UK manufacturing sector activity, albeit at a slightly slower pace. The Markit UK manufacturing PMI came-in at 56.7 for May, down from April's 57.3 but better-than 56.5 expected and provided a minor boost to the British Pound.

   •  UK manufacturing PMI highlights domestic strength - ING

This coupled with the prevalent risk-on environment further dented the Japanese Yen's safe-haven demand and collaborated to the pair's up-move to fresh weekly high level of 143.20. 

The up-move, however, lacked strong follow through momentum as investors remained cautious amid political uncertainty ahead of the upcoming UK general election on June 8. Hence, it would now be interesting to see if the up-move is utilized to lighten some long position or a fresh bout of short-covering helps the cross to build on the recovery gains. 

Technical levels to watch

Immediate resistance is pegged near 143.55-60 area, above which the recovery momentum could get extended even beyond the 144.00 handle towards the next major hurdle near 144.25-30 region. On the downside, 142.80 level now becomes immediate support to defend, which if broken could accelerate the slide back towards 142.30 horizontal support before the cross eventually drops back below the 142.00 mark to retest one-month lows support near mid-141.00s.