GBP/JPY retrace to 135.50, erases UK jobs data-led gains

The GBP/JPY cross faded UK jobs report-led bullish spike and has retraced over 100-pips from session high level of 136.62 to currently trade around mid-135.00s.

During European session on Wednesday, the British Pound managed to gain traction as better-than-expected growth in average earnings (including bonus) negated a higher-than-expected rise in claimant count change. Moreover, offered tones around the Japanese Yen also provided an additional leg of strength for the cross and lifted to weekly high. 

The cross, however, reversed majority of its mixed jobs data-led gains amid renewed USD buying interest, which exerted selling pressure around the GBP/USD major and eventually dragged the GBP/JPY cross lower.

Market expectations over BOJ's next monetary policy move would continue to drive the pair until next week. In the meantime, traders turn their attention to BOE decision on Thursday, which although might turn out to be a non-event but might still provide some impetus for short-term traders.

Technical levels to watch

From current levels, 135.00 psychological mark might attract some buying interest and hence, is likely to protect the immediate downside. However, a decisive break below this immediate support is likely to drag the cross immediately towards weekly low support near 134.50 region before the pair eventually drops to to test its next major support near 133.50 area.

On the flip side, 136.00 round figure mark now becomes immediate resistance above which a bout of short-covering is likely to boost the pair immediately towards its next major resistance near 137.00 handle.