GBP/JPY - Sell-off stalled ahead of UK PMI release

• Off 5-1/2 month lows, the pair eyes UK PMI release.
• Upside could be capped by risk aversion and resulting Yen demand.

GBP/JPY fell to 146.47 in Asia - the lowest level since Sept. 14 before recovering 146.96, possibly due to oversold conditions showed by the hourly and 4-hour relative strength index (RSI).

UK PMI is due at 09:30 GMT

The UK manufacturing PMI is expected to show the pace of expansion in the activity remained largely unchanged in February (expected 55.00, previous 55.3). A weak print would open doors for a deeper pullback below the 50-week moving average (MA) of 146.54. Meanwhile, an above-forecast reading could yield a corrective rally in the GBP/JPY.

However, upticks will likely be short-lived as Yen would find fresh bids if the European and US stock markets trade in the risk-averse manner.

Also, GBP traders would keep an eye on Brexit related news flow. Increased tensions on the Brexit front would force markets to price-in a delay in the Bank of England (BOE) rate hike. 

GBP/JPY Technical Levels

A move above 146.97 (Nov. 28 low) would expose resistance at 147.75 (200-day MA) and 148.00 (psychological level). On the downside, a convincing break below 146.54 (50-week MA) would shift attention to 144.78 (Jan. 2017 high) and 143.77 (100-week MA).