GBP/JPY tests 2-month rising trendline ahead of UK retail sales

• GBP/JPY is defending the trendline connecting the Aug. 15 low and Sept. 7 low.
• The trendline support will likely be breached on below-forecast UK retail sales print.

The GBP/JPY cross is flashing red in Asia but is holding key rising trendline support in Asia.  

At press time, the pair is trading at 147.40 - down 0.22 percent on the day - having tested the two-month-long rising trendline support of 147.24 earlier today.

The trendline support is holding ground despite the risk aversion in the Asian stocks and the resulting demand for the anti-risk JPY. As of writing, China's Shanghai Composite is reporting a 1.4 percent drop and stocks in Australia are down 0.20 percent.

Further, the EU and UK negotiators continue to struggle for a breakthrough on key problems, primarily the Irish border issue, keeping the GBP under pressure.

However, the rising trendline could be breached if the UK retail sales data for September, due at 08:30 GMT, prints below estimates. The market is expecting the data to show that retail sales dropped 0.4 percent month-on-month, following a 0.3 percent rise in August.

GBP/JPY Technical Levels

Resistance: 147.79 (10-day EMA), 148.41 (Oct. 16 high), 149.51 (Oct. 8 high)

Support: 147.24 (rising trendline suppot), 146.56 (100-day EMA), 145.96 (38.2% Fib R of 139.90/149.72)