GBP/JPY flirting with lows near 137.00 handle

The GBP/JPY cross gapped lower on Monday and got slammed to the lowest level since Nov. 21 on escalating fears of a 'hard Brexit'

Currently trading around 137.10 region, the British Pound came under intense selling pressure on Monday in response to weekend news reports that suggested UK PM Theresa May is all set to call for ‘hard Brexit’ during a much anticipated speech on Tuesday.  

Moreover, the prevalent risk-off mood, as depicted by weakness in equity market, is also lending support to the Japanese Yen's safe-haven demand and collaborating to the offered tone around the pair. 

From technical perspective, the cross extended last week's break down below the very important 200-day SMA and has now struggling to defend 50% Fibonacci retracement level of 126.70-148.46 recent leg of up-move. Hence, a follow through selling pressure below 137.00 handle would confirm a fresh break down and open room for extension of the near-term corrective slide.

Technical levels to watch

On a sustained break below 137.00 handle, the cross is likely to accelerate the slide towards 135.85-90 area ahead of 61.8% Fibonacci retracement level support near 135.00 psychological mark. On the upside, a convincing recovery above 137.50-55 resistance seems to assist the cross back towards 138.90-139.00 hurdle. Any further recovery beyond 139.00 handle might now be capped at 140.00 psychological mark, also coinciding with 38.2% Fibonacci retracement level.