GBP/JPY keeps the red below mid-134.00s, 1-week lows

• GBP/JPY witnessed some follow-through selling for the fourth straight session on Tuesday.
• The British pound was weighed down by weaker-than-expected monthly UK GDP report.
• Worsening US-China relations benefitted the safe-haven JPY and added to the selling bias.

The GBP/JPY cross continued losing ground through the early European session and dropped to one-week lows, around the 134.20-15 region in the last hour.

The cross prolonged its recent corrective slide from the vicinity of the 136.00 mark, or near four-week tops and remained under some selling pressure for the fourth consecutive session on Tuesday. The offered tone surrounding the British pound was seen as one of the key factors exerting pressure on the GBP/JPY cross amid the prevalent cautious mood.

The British pound witnessed some fresh selling following the release of weaker-than-expected UK monthly GDP report, which showed that the British economy recorded a modest growth of 1.8% in May as compared to consensus estimates pointing to a reading of +5%. The softer reading negated upbeat manufacturing production and mostly inline industrial producing figures.

This comes amid renewed concerns about deteriorating diplomatic relations between the world's two largest economies. This, in turn, further benefitted the Japanese yen's safe-haven status against its British counterpart and contributed to the GBP/JPY pair's weaker tone. However, a modest bounce in the US equity futures helped limit deeper losses, at least for the time being.

Hence, it will be prudent to wait for some follow-through selling below the 134.00 mark before positioning for any further near-term depreciating move.

Technical levels to watch