GBP/JPY fades a spike to 162.89, drops back to 162.30

Global risk-on sentiment was seen hurting the safe-haven appeal for the Japanese currency, with the GBP/JPY cross surging to 162.89 before retracing from highs to currently trade at 162.30.

Receding 'Brexit' fears coupled with risk-on rally witnessed across global equity markets had been the key factors that has assisted the pair to register a remarkable recovery of around 900-pips from early May lows of 153.86. 

The pair on Monday jumped to its highest level since mid-March and the up-move was led by reports that suggested Japan's Prime Minister Shinzo Abe might delay a planned sales tax hike until 2019. Also Japanese Retail Sales for the month of April showed a contraction of 0.8% from April last year. The reading was better than an expected contraction of 1.2% but still pointed to weakening consumer demand.

From technical perspective, Monday's move led to a decisive strength above 100-day SMA and an important resistance near 162.00 handle. Hence, the pair seems more likely to extend its upward trajectory in the near-term.

Technical levels to watch

On the immediate downside, 162.00 handle now seems to act as immediate support, below which the pair might drop back towards 100-day SMA support, currently near 161.20-161.00 region. However, any weakness back towards 100-day SMA might now be bought into. 

On the upside, momentum above 163.00 handle could gain further traction, boosting the pair immediately towards March highs resistance near 164.00 round figure mark. Continuous buying interest beyond 164.00 level now seems to pave way for extension of the pair's near-term upward trajectory, even beyond 165.00 psychological mark resistance, towards its next major resistance near 165.90-166.00 level.