GBP/JPY surrenders early recovery gains, drifts back closer to multi-month lows

   •  Upbeat UK retail sales/May’s announcement to step down provided a temporary boost. 
   •  The intraday uptick turned out to be rather short-lived amid fears of a no-deal Brexit.

The GBP/JPY cross failed to capitalize on the intraday positive move and has now retreated back below the 139.00 handle, back closer to multi-month lows set on Thursday.

The British Pound gained some positive traction on the last trading day of the week and the attempted recovery was supported by upbeat UK monthly retail sales data. The cross climbed to an intraday high level of 139.49 after the UK PM Theresa May announced that she will be stepping down as Party leader on June 7th. 

Meanwhile, a slight improvement in the global risk sentiment, as depicted by a goodish rebound in equity markets undermined the Japanese Yen's relative safe-haven demand and remained supportive, albeit fears of a hard-Brexit kept a lid on any strong follow-through, rather prompted some fresh selling at higher levels.

The fact that a pro-Brexit hardliner Boris Johnson is the leading candidate and is gathering momentum to replace May as PM seemed to have fueled concerns about a no-deal split and turned out to be one of the key factors behind the pair's intraday pullback of around 75-pips. Hence, a follow-through weakness, led by some fresh technical selling below Thursday's swing low support near mid-138.00s, now looks a distinct possibility.

Technical levels to watch