GBP/JPY is expected to trade with a bullish bias. The pair is reversing up and stays above its 50-period moving average. Meanwhile, the 20-period moving average has also crossed above the 50-period one, and the relative strength index is above 50. The British pound marked a session-low of 1.2182 against the U.S. dollar but managed to settle at 1.2235, a hair up from 1.2233 in the previous session. Traders are watching closely Britain's GDP report to be released on Thursday, which will be the first reading of how the broad economy has performed since the Brexit vote in June.

As long as 127.00 is not broken down, further bounce is preferred with 127.90 and 128.15 as targets.

The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. Therefore, long positions are recommended with the first target at 127.90 and the second one at 128.15. In the alternative scenario, short positions are recommended with the first target at 126.65 if the price moves below its pivot point. A break of this target is likely to push the pair further downwards, and one may expect the second target at 126.35. The pivot point lies at 127.00.

Resistance levels: 127.90, 128.15, 128.70

Support levels: 126.65, 126.35, 125.25