GBP/JPY: On the back foot ahead of UK retail sales release

• BOE August rate hike odds drop, Sterling takes a hit.
• Risk aversion put a bid under the Japanese Yen.
• GBP/JPY could revisit lows seen in March if UK retail sales print below estimates.

The GBP/JPY pair fell to 145.95 on Wednesday - the lowest level since March 5 as the risk aversion in the equities put a bid under the Japanese Yen.

Meanwhile, GBP ran into offers after the official data showed the UK inflation fell unexpectedly in April. As of writing, the GBP/JPY pair is trading at 146.30.

The UK data, scheduled for release at 08:30 GMT, is expected to show consumption as represented by retail sales rose 0.7 percent month-on-month in April, following a 1.2 percent drop in March. Core retail sales are seen rising 0.4 percent month-on-month in April vs 0.5 percent drop in March.  

An above-forecast reading could offer relief to battered sterling bulls. Meanwhile, a weaker-than-expected data would embolden calls of further delay in the BOE rate hike. As of now, the investors are pricing-in a one-in-three chance of the BoE rate hike in August - down from 50/50 earlier this week.

GBP/JPY Technical Levels

The support is seen at 145.95 (previous day's low) and 144.99 (March 2 low), and resistance is lined up at 147.06 (May 4 low) and 148.06 (5-day moving average).