GBP/JPY retreats from tops near 137.20 post-BoE

• GBP/JPY eases from daily highs post-BoE event.
• Earlier, UK headline Retail Sales contracted 0.5% MoM.
• The BoE left the repo rate unchanged at 0.75% today.

The knee-jerk in the Sterling is now motivating GBP/JPY to recede from the area of daily highs in the boundaries of 137.20, returning to levels below the key support at 137.00 the figure.

GBP/JPY looks to risk trends, UK politics

In spite of the correction from tops, the cross keeps the weekly recovery well and sound on Thursday, up for the third session in a row from Tuesday’s 135.40 area, or fresh 5-month lows.

Today’s decision to keep rates on hold by the Bank of England was supported by a unanimous vote and sparked some selling around the British Pound, particularly after stressing that risks of a Brexit ‘no deal’ scenario are on the rise.

In addition, the ‘Old Lady’ revised lower its economic growth projections and sees consumer prices slipping below the 2% level later in the year, all coupled with signs that wage growth could have stopped increasing.

Earlier in the UK docket, headline Retail Sales contracted at a monthly 0.5% in May, while core sales dropped 0.3% inter-month.

The continuation of the rebound in the cross remains largely dependent on the broader risk-appetite trends, where the potential for a move down on rates by the Federal Reserve and ongoing trade jitters should play a significant role. However, persistent uncertainty around the UK government and Brexit carries the potential to undermine any serious rebound in GBP in the near/medium term.

GBP/JPY key levels

As the moment the cross is gaining 0.11% at 136.79 and a break above 137.17 (high Jun.20) would expose 137.53 (21-day SMA) and then 141.50 (55-day SMA). On the other hand, the immediate support aligns at 136.43 (100-hour SMA) followed by 135.38 (low Jun.18) and finally 130.69 (2019 low Jan.3).