GBP/JPY surges through 145.00 mark, hits one-month high on UK CPI

The GBP/JPY cross continued gaining strong traction through early European session and surged past the key 145.00 psychological mark following the release of latest UK inflation figures.

The cross built on previous session's bullish break through above the very important 200-day SMA and jumped to the highest level since early August after the headline UK CPI bettered expectations, coming in at an annual rate of 2.90% for August. 

   •  UK August CPI rises more than expected

Today's higher than expected inflation numbers reinforced expectations that the BoE would sound more hawkish on interest rates, when it announces the latest monetary policy decision on Thursday, and provided a strong boost to the British Pound.

Moreover, the market sentiment continues to recover on easing concerns over the N. Korean episode. Hence, the prevalent risk-on was seen denting the Japanese Yen's safe-haven demand and also collaborated to the strong bid tone surrounding the cross. 

Meanwhile, possibilities of some big stops being triggered on a move beyond the 145.00 handle could also be one of the factors behind the pair's sharp upsurge over the past hour. 

Technical levels to watch

Currently trading around mid-145.00s, immediate resistance is pegged near 145.75 level, above which the cross is likely to surpass the 146.00 handle and test its next resistance near the 146.55-60 region.

On the flip side, the 145.00 handle now seems to protect immediate downside, which if broken could drag the cross back towards 144.20 horizontal support ahead of the 144.00 handle.