GBP/JPY extends disappointing UK PMI-led rejection move from 140.00 handle

Having faced rejection near the key 140.00 psychological mark, the GBP/JPY cross extended disappointing UK PMI-led slide and has now moved on the brink of decisively breaking below the 139.00 handle. 

Spot ran through some fresh offers after the UK manufacturing PMI fell short of consensus estimates and showed manufacturing activity slowed for the third consecutive month in March. The Markit UK manufacturing PMI dropped to a four month low level of 54.2 for March, down from 54.6 recorded in February and worse than 55.1 expected. The disappointing PMI print prompted traders to lighten their bullish GBP bets against the backdrop of uncertainty surrounding the Brexit negotiations. 

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Meanwhile, a subdued action surrounding the USD/JPY major has failed to provide any impetus, with the sentiment surrounding the British Pound being an exclusive driver of the GBP/JPY pair's movement on Monday.

With today's slide, the cross has now reversed Friday's tepid recovery gains and has also reaffirmed strong supply zone around the 140.00-140.50 region, the top end of trading range held since early March. Hence, traders would now wait for a follow through retracement below 138.50-40 support area to confirm near-term bearish bias.

Technical levels to watch

Sustained weakness below the 139.00 handle could get extended towards 138.50-40 support area, below which the cross is likely to break below 138.00 mark and head towards retesting last week's 2-1/2 month lows support near mid-137.00s.

Meanwhile on the upside, 139.55-60 area now seems to act as immediate resistance, which if cleared might assist the cross back towards the 140.00 handle. Any further up-move beyond 140.00 mark might continue to confront strong hurdle near 140.55-60 area, above which the cross seems all set to surpass 140.75 intermediate resistance and head towards reclaiming the 141.00 handle.