GBP/JPY on the verge of breaking below 127.00 handle

The GBP/JPY cross extended reversal move from Tuesday's 5-day high and has now erased all of its tepid recovery gains to mid-127.00s.

Currently trading around 127.15 region, ran through fresh offers after UK monthly retail sales figure disappointed and showed no growth in consumer spending during the month of September. 

Meanwhile, the prevalent cautious sentiment around European equity markets, ahead of ECB monetary policy decision, is extending support to the Japanese Yen's safe-haven appeal and failing to restrict the pair's reversal from weekly high touched following the release of upbeat UK CPI print on Tuesday. 

Traders on Thursday will remain focused on ECB announcement and subsequent press conference, which would derive safe-haven demand for the Japanese Yen and eventually provide some impetus to the GBP/JPY cross.

Technical levels to watch

Weakness below 127.00 handle seems to get extended immediately towards 126.60-50 horizontal support below which a fresh bout of selling pressure is likely to drag the cross below 126.00 handle towards its next major support near 125.50 area.

On the upside, a sustained move above session high resistance near mid-127.00s is likely to assist the pair back towards reclaiming 128.00 handle above which the pair seems to dart towards 20-day SMA resistance near 129.00 handle.