Is GBP/JPY building base below 149.00?

• The chart shows multiple daily lows around 148.90.
• Japan logs trade deficit in January, Tankan index dropped in Feb.

Four out of last six candles on the GBP/JPY daily chart show intraday low in the 148.90 neighborhood.

Further, last Wednesday's "long-tailed" doji also indicated the sell-off from 156.61 (Feb. 2 high) has run out of steam. The price action indicates the cross could be building a base for a corrective rally. As of writing, the pair is trading at 149.20.

Japan reported trade deficit of ￥(JPY) 943.4 billion in January as imports rose 7.9 percent year-on-year and exports jumped 12.2 percent. Meanwhile, the Tankan index showed confidence among Japanese manufacturers worsened significantly in February due to appreciation in the Yen. Both data sets have not had any significant impact on the JPY pairs.

That said the pair could witness a big move higher if UK wage growth data due this Wednesday beat estimates. Also, PM May and several ministers are set to deliver a series of speeches this week. The pound may find takers if May and Co. clarify the government’s position on Brexit.

GBP/JPY Technical Levels

A break above 149.48 (5-day MA) would open up upside towards 150.00 (psychological level) and 150.38 (10-day MA). On the downside, breach of support at 148.78 (previous day's low) could yield 147.96 (last Wednesday's doji candle low) and 147.60 (200-day MA).