GBP/JPY retraces to sub-134.00 level, still holding with minor gains

After hitting a fresh 4-week high, the GBP/JPY cross ran through profit-taking selling pressure at higher level and trimmed some of its gains but held in positive territory to currently trade around 134.00 handle.

Broad based greenback strength on Friday triggered a sharp short-covering rally in the USD/JPY major and helped the cross to record gains for second consecutive week. On Monday, the Japanese Yen continued with its slide while an early tepid bounce in the GBP/USD major helped the pair to extend its upward trajectory to the highest level since early August. 

However, renewed selling pressure around the British Pound capped further upside while bid tone surrounding the Japanese Yen extended support and is restricting any sharp downslide for the cross. 

With UK banks closed on Monday in observance of the Summer Bank Holiday, trading activity is likely to remain light during European session and the cross might take cues from the prevalent risk-sentiment.

Technical levels to watch

On the immediate downside, 133.50 level seems to protect immediate downside below which the cross is likely to extend the profit taking move even below 133.00 round figure mark, towards testing a short-term ascending trend-channel support near 132.75 region.

On the flip side, sustained momentum back above 134.00 handle has the potential to continue boosting the cross immediately towards the ascending trend-channel resistance near 134.85-90 region, nearing 135.00 psychological mark strong resistance.