GBP/JPY drops to six week low, trying to defend 200-DMA

The GBP/JPY cross remained well-offered on the first trading day of a fresh trading week and has now dropped to the lowest level since Nov. 30.

Currently trading below 142.00 handle, the cross is on the brink of breaking below the very important 200-day SMA support amid renewed concerns of 'hard Brexit' after comments from UK Prime Minister Theresa May over the weekend, which is weighing heavily on the British Pound across the board. 

Adding to this, weaker sentiment surrounding riskier assets, as depicted by bearish trading in European equity markets and commodity space, is also boosting demand for traditional safe-haven currency, Yen, and further collaborating to the pair's weakness to six-week lows. 

With a relatively lighter economic docket on Monday and Tuesday, broader market risk-sentiment and any fresh news surrounding Brexit would continue to drive the cross ahead of UK Manufacturing Production data on Wednesday.

Technical levels to watch

A follow through selling pressure below 200-day SMA has the potential to continue dragging the pair further towards its next support near 141.00 round figure mark, en-route 140.00 psychological mark. On the upside, recovery above 142.50 immediate resistance might now confront resistance near 143.15-20 horizontal area above which the cross is likely to aim towards reclaiming 144.00 round figure mark.