GBP/JPY recovers smartly from 2-month lows, retakes 140.00 mark and beyond

The GBP/JPY cross staged a smart recovery on Thursday and surged around 100-pips from a two-month low level of 139.30, touched earlier during the Asian session.

In absence of any disappointment from today's UK GDP estimate, which matched preliminary reading of a 0.3% q-o-q growth for the second quarter of 2017, seems to have prompted traders to unwind some of their bearish bets. 

This coupled with improving investors' appetite for riskier assets - like equities, further weighed on the Japanese Yen's safe-haven appeal and collaborated to the pair's strong recovery move since early European session, back above the key 140.00 psychological mark.

It, however, remains to be seen if the recovery move is backed by any genuine buying interest or is solely led by short-covering amid weaker persistent weaker bias surrounding the British Pound, which continues to be weighed down by recent dovish BoE tilt and uncertainty around Brexit talks. 

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Technical levels to watch

From current levels, immediate resistance is pegged near mid-140.00s, above which a fresh bout of short-covering could lift the cross towards weekly highs resistance near the 141.00 handle en-route 141.25-30 horizontal zone. 

On the flip side, 139.60-55 area now seems to protect the immediate downside, which if broken would turn the cross vulnerable to extend its near-term downward trajectory and aim towards testing the 139.00 round figure mark.