GBP/JPY capped at 200-DMA ahead of BoE

   •  Today’s mixed UK economic data fails to inspire GBP bulls.
   •  A sudden pickup in JPY demand now seemed to cap gains.
   •  Focus remains on the BoE decision and quarterly inflation report.

The GBP/JPY cross held on to is its positive tone for the second consecutive session, albeit struggled to break through the very important 200-day SMA ahead of the BoE.

The cross extended this week's recovery move from the 147.00 handle, 1-1/2 month lows, and touched a one-week high level of 149.23 during the early European session on Thursday. The up-move, however, lacked any strong conviction, with bulls further disheartened by today's mixed UK economic releases.

Meanwhile, a sudden pickup in the JPY demand, despite the prevalent risk-on mood across European equity markets, coupled with investors' reluctance to place aggressive bets, ahead of today's key event risk - the latest BoE monetary policy update, further collaborated towards capping gains beyond a technically important moving average resistance. 

The UK central bank is unlikely to raise interest rates today but what is more important for the market would be the quarterly inflation report and the BoE Governor Mark Carney's post-meeting presser. The details would be looked upon to reinforce prospects for an imminent rate hike in August, which might eventually drive the British Pound in the near-term.

Technical levels to watch

A convincing move beyond the 200-DMA hurdle is likely to trigger a short-covering bounce and lift the cross towards reclaiming the key 150.00 psychological mark with some intermediate resistance near mid-149.00s.

On the flip side, the 148.60 level now seems to protect the immediate downside, which if broken might prompt additional weakness towards the 148.00-147.85 support en-route the 147.00 handle.