GBP/JPY deflates to 131.50, but downside seems limited

Following an initial up-tick back to 132.00 handle, the GBP/JPY cross retraced to erase all of its gains and is now trading absolutely flat around mid-131.00s.

A profit-taking move in the GBP/USD major from 2-week highs is acting as a barrier that is restricting the cross to build on to its Thursday's gains on the back of strong UK monthly retail sales data. 

Thursday's up-move helped the cross to surpass a short-term descending trend-channel resistance and confirm a break-out, which now seems to have increased prospects of further recovery for the cross in the near-term.

Technical levels to watch

From current levels, the descending trend-channel break-point near 131.00 region should act as immediate support. Weakness below this resistance turned immediate support is likely to be bought into and hence, should limit any further downslide near 130.65-60 horizontal support.

Meanwhile on the upside, momentum back above 132.00 handle might confront resistance around 132.50 region, which if conquered should help the cross to extend its upward trajectory, even beyond 133.00 round figure mark, towards its next major resistance near 133.75-80 region.