GBP/JPY falls to 1-week low on softer UK CPI, finds some support near 147.00 mark

   •  UK headline/core CPI fall short of expectations and prompt some fresh GBP selling.
   •  Risk-on mood weighs on JPY’s safe-haven demand and helps limit further downside.

The GBP/JPY cross continued losing ground for the third consecutive session on Wednesday and dropped to one-week lows on softer UK consumer inflation figures.  

The cross extended this week's rejection slide from just ahead of the very important 200-day SMA and met with some fresh supply after the headline UK CPI fell short of consensus estimates, coming in at 2.4% y/y in June.

Adding to the disappointment, core CPI, which excludes volatile food and energy prices) arrived at 1.9%, down from 2.1% previous and dragged the cross farther from near eight-week tops set at the beginning of this week. 

Today's weaker inflation readings might have done little to fade prospects for an August BoE rate hike move and thus, helped limit further downside. This coupled with the prevalent risk-on mood, which tends to weigh on the Japanese Yen's safe-haven appeal, further assisted the cross to defend the 147.00 handle, at least for the time being. 

It would now be interesting to see if bears are able to maintain their dominant position or opt to lighten their positions, especially after the recent fall of around 225-pips from near eight-week tops set at the beginning of this week. 

Technical levels to watch

Weakness below the 147.00 mark is likely to get extended towards 146.70-65 horizontal zone en-route the 146.15-10 support area. On the flip side, the 147.70-80 region now seems to act as an immediate hurdle, above which the cross is likely to surpass the 148.00 handle and aim back towards testing 148.70 supply zone.