GBP/JPY in recovery mode ahead of UK services PMI

• GBP/JPY created a bullish hammer last week, signaling a scope for sharp recovery
• The pound could pick up a strong bid if the UK services PMI betters estimate.

The GBP/JPY created a bullish hammer last week, signaling the sell-off from the recent high of 153.84 has ended.  

A positive follow-through this week would confirm a bullish reversal. That said, Pound will likely find a strong bid only if the UK services PMI, due tomorrow at 08:30 GMT, beats estimates. The market expects the index to edge slightly lower to 52.2 in May from 52.8 in April.

Also, the pair could take cues from the broader market sentiment. The Italian fears seem to have receded for now. However, trade tensions are rising and the Japanese Yen could pick up a strong bid if the equity markets turn risk-averse. Therefore, risk aversion could pour cold water over the optimism generated by last week's bullish hammer.

GBP/JPY Technical Levels

The resistance is seen at 147.04 (5-week moving average), 147.27 (4-hour 100MA), 148.48 (50-week moving average). Meanwhile, support is lined up at 146.31 (4-hour 50MA), 144.13 (May 31 low), and 143.19 (May 29 low).