GBP/JPY's corrective rebound from 118.82 extend further last week. While further rise could still be seen, we'd be cautious on reversal as it approaches 127.10 support turned resistance. Upside momentum is seen diminishing. On the downside, break of 122.12 will now indicate that corrective rise from 118.82 is finished and larger decline from 133.48 is resuming for a test on 116.83/117.29 support zone.

In the bigger picture, the corrective structure of the rebound from 116.83 to 133.48 indicates that down trend from 2007 high of 251.09 is not finished yet. Break of 116.83 will resume such down trend and target 110 psychological level first. Break will pave the way to the more important 100 level and possibly below. On the upside, however, above 127.01 will firstly indicate that fall from 133.48 is finished. Further, break of 133.48 should then confirm medium term reversal.

In the longer term picture, fall from 251.09 is treated as resumption of multi decade down trend. Current development gives no indication of medium term reversal yet and GBP/JPY would likely drop towards 100 psychological level on down trend resumption.