GBP/JPY bounces off lows, back near 137.00 handle

• Investors remain reluctant to place any bullish bets amid no-deal Brexit fears.
• Monday’s dismal UK manufacturing PMI further adds to the selling pressure.

The British Pound remained depressed at the start of a new trading week, with the GBP/JPY cross falling to an intraday low level of 136.74 before recovering around 20-pips in the last hour.

The cross opened with a bullish gap in reaction to the latest optimism over the US-China trade war truce, which triggered a fresh wave of the global risk-on trade and weighed heavily on the Japanese Yen's safe-haven status.

The positive momentum lifted the cross to over two-week tops, around the 137.79, though failed to capitalize on the momentum, rather met with some fresh supply amid growing concerns over a no-deal Brexit on October 31.

This coupled with the disappointing release of the UK manufacturing PMI, which fell to 48.0 in June - marking the lowest level since February 2013, further dented the already weaker sentiment surrounding the Sterling.

The cross now seems to have found some support at lower levels, though a meaningful recovery still looks elusive amid worries over the global economic growth - reaffirmed by awful PMI releases since the weekend. 

Hence, it would be prudent to wait for a strong follow-through buying before confirming that the cross might have actually bottomed out and positioning for any meaningful recovery in the near-term.

Technical levels to watch