GBP/JPY drops below 158.50, eyeing 50-DMA for immediate support

Bears strengthened their grip and extended the GBP/JPY pair's downfall from day's peak of 159.84 to a fresh session low of 158.26 amid global risk-off trade and ongoing concerns over the 'Brexit'.

After rising to a three week high level of 161.63 on Thursday, the pair reversed some of its weekly gains to close shy of 160.00 handle and resumed its slide on Monday. The global risk-off sentiment dominated investor sentiment on Monday, thus boosting the safe-haven appeal of the Japanese currency.

Moreover, the latest UK Treasury Report raised further concerns over the short-term impact of 'Brexit' on the UK economy and on the British Pound. The report pointed to a potential fall of around 12-15% for the Pound index in case of the UK’s depart from the EU.

The combination of global risk-off sentiment and looming 'Brexit' concerns have been the key factors dragging the GBP/JPY pair's lower on Monday. The pair has now dropped close towards testing its immediate strong support near 50-day SMA, a level that would help traders to determine the pair’s move for next few trading sessions.

Technical levels to watch

From current levels, 50-day SMA near 157.95-158.00 round figure mark seems to extend some immediate support for the pair. Failure to hold this immediate support, and a subsequent break below 20-day SMA support near 157.60 region, has the potential to extend the pair's down-slide further towards its next major support near 156.50-30 region.

Alternatively, a bounce off 50-day SMA support now seems to confront immediate resistance near 158.70-75 region, which if conquered seems to assist the pair back towards 160.00 psychological mark.