GBP/JPY drops 40 pips from session highs on Yen demand

• GBP/JPY is under pressure on Yen demand, is creating a double top pattern, the hourly chart shows.
• The hawkish shift in BOE expectations will likely keep on the hunt for a major trendline resistance.

The GBP/JPY pair fell 40 pips to a session low of 147.60 as the USD/JPY pair failed to hold above the 200-day moving average and fell below 110.00.

As of writing, the GBP/JPY pair is trading at 147.75. Meanwhile, the USD/JPY pair is trading at 100.04, having clocked a session low of 109.91.

The bid tone around the Yen will likely strengthen further if the equities turn risk-off. In this case, GBP/JPY may drop below 147.50 (double top neckline, as per the hourly chart), opening doors for 147.00.

That said, the probability of a deeper sell-off appears low if we take into consideration the hawkish shift in BOE expectations. For instance, the odds of a 25 basis point rate hike in August have improved to 50 percent after the better-than-expected UK services PMI release.

GBP/JPY Technical Levels

Support: 147.50 (double top neckline), 146.95 (5-day moving average), 146.59 (50-hour moving average).

Resistance: 148.00 (session high), 148.20 (falling trendline - April 18 high-April 26 high), 148.52 (50% Fib R of April 13 high - May 29 low).