GBP/JPY bounces off lows on upbeat UK retail sales, but lacks follow-through

The GBP/JPY cross reversed an early dip to the 141.00 neighborhood, or over one-week lows, in reaction to stellar UK macro data, albeit lacked any strong follow-through.

The British Pound got a minor boost after the latest UK monthly retail sales growth surpassed even the most optimistic estimates and came in to show 1.0% m/m growth in January, with the yearly rate jumping to 4.2%.

Despite the upbeat report, the British Pound remained depressed amid continued drama surrounding Britain’s exit from the European Union, especially after the UK PM Theresa May’s government suffered yet another blow when the British Parliament rejected the revised Brexit deal on Thursday.

This coupled with the prevalent cautions mood across global financial markets, as depicted by weaker tone around European equity markets, continued underpinning the Japanese Yen’s relative safe-haven demand and further collaborated to capping any meaningful up-move at least for the time being.

With today’s key UK data out of the way, any incoming Brexit headlines might continue to act as an exclusive driver of the sentiment surrounding the British Pound and produce some meaningful trading opportunities.

Technical levels to watch