GBP/JPY clings to gains above 127.00 handle after UK CPI

The GBP/JPY cross held on to its strength above 127.00 handle and is currently trading close to session high near 127.40 following upbeat UK CPI print.

According to Tuesday's data, released by the Office for National Statistics, UK CPI rose to 1.0% y-o-y in September, marking the highest level since November 2014 and surpassed consensus estimates of 0.8% and previous month's 0.6%. Meanwhile, the core inflation also edged higher to 1.5% in September as compared to 1.4% expected. 

Moreover, upbeat sentiment around European equity markets is denting the Japanese Yen's safe-haven appeal and extending further support to the bid tone surrounding the GBP/JPY cross.

Focus now shifts to this week's other important macro releases from UK, including employment report and monthly retail sales, while broader sentiment would continue be driven by any fresh news / developments related to Brexit.

Technical levels to watch

Immediate upside resistance is pegged at 127.93 (Oct. 14 high) above which the pair seems all set to aim towards 20-day SMA resistance near 129.45 region with 128.55 and 129.00 round figure mark acting as intermediate resistance levels. 

On the downside, sustained weakness back below 127.00 handle, leading to a subsequent drop below 126.85 horizontal support, is likely to get extended towards session low support near 126.25-20 region, which if broken might turn the cross vulnerable to head back towards 125.00 psychological mark support.