GBP/JPY fades UK PMI-led bullish spike, drops back to session low

The GBP/JPY cross faded UK PMI-lead a bullish spike above 138.00 handle and is now headed back towards session low. 

Currently trading around mid-137.00s, the cross attempted a recovery amid renewed buying interest surrounding the British Pound following the release of stronger-than-expected UK services PMI that seems to suggest that the economy has able to withstand the initial shock of the historic Brexit referendum. 

The Markit/CIPS UK services PMI followed the manufacturing and construction indices higher and jumped back into expansion territory to 52.9 in August, which was better-than 50.0 expected and 47.4 recorded in July.

The pair, however, failed to extend its bullish momentum as the JPY maintained its strong bid tone despite of dovish comments from BoJ Governor Kuroda earlier on Monday and buoyant sentiment surrounding European equity markets.

Technical levels to watch

Further weakness from current levels is likely to find support near 137.00 round figure mark, which if broken could accelerate the slide even below 136.00 handle towards 135.80 horizontal support. On the flip side, resumption of bullish momentum above 138.00 handle should now assist the cross through last week's multi-week high resistance and aim towards reclaiming 139.00 handle.