GBP/JPY back above 135.00 level after UK PMI release

The GBP/JPY cross recovered from an early dip to 134.20 region and has now moved closer to 135.00 handle after the release of UK services PMI.

According to Markit's PMI, UK services sector activity witnessed a sharp contraction during the month of July, recording its fastest rate of decline since March 2009. The British Pound, however, gained traction as the reading was in-line with initial estimates and seems to contribute towards easing some fears of a post-Brexit sharp economic downturn. 

Meanwhile, the Japanese currency was seen holding steady following Tuesday's sharp up-surge, especially against the US counterpart, helping the GBP/JPY cross to recover from session low. 

Traders now turn their attention to the much awaited BOE monetary policy decision, scheduled to be announced on Thursday. Uncertainty surrounding introduction of additional quantitative easing measures might restrict any sharp appreciation for the British Pound. 

Technical levels to watch

From current levels, a sustained move above 135.00 psychological mark is likely to boost the pair immediately towards 135.60 horizontal resistance, above which a bout of short-covering rally seems to lift the pair back above 136.00 handle.

On the flip side, failure to sustain its recovery gains above 135.00 handle, and a subsequent weakness below 134.65-60 region, now seems to force the pair to break through 134.00 support and head towards head towards testing its next major support near 132.50 region.