GBP/JPY moves back above 136.00 mark, closer to session tops ahead of UK budget

• GBP/JPY rallies around 250 pips from the post-BoE low to 134.00 round-figure mark.
• Receding demand for safe-haven assets weighed on the JPY and remained supportive.

The GBP/JPY cross quickly reversed an early European session fall and is currently placed near the top end of its daily trading range, around the 136.40-50 region.

The cross witnessed a dramatic intraday turnaround on Wednesday and has rallied around 250 pips from the vicinity of the 134.00 round-figure mark, or session lows touched in a knee-jerk reaction to the Bank of England's surprise move to cut rates by 50 bps.

The UK central bank also launched a lending scheme worth £100 to small and medium-sized businesses. This comes at the time when the UK government is expected to significantly increase its expenditure to support the economy and provided a goodish lift to the sterling.

The latest developments helped offset disappointing UK macro data, which showed that the economy remained flat in January as compared to a modest 0.1% growth anticipated. Separately, the UK industrial production data also fell short of expectations, albeit did little to impress bearish traders.

Apart from domestic factors, a modest recovery in the equity markets undermined the Japanese yen's perceived safe-haven demand and further collaborated to the pair's intraday upsurge. Bulls took some breather ahead of the weekly tops and look forward to the UK annual budget for a fresh impetus.

Technical levels to watch