GBP/JPY slides below 192.00 to hit fresh daily low, downside potential seems limited

• GBP/JPY struggles to capitalize on its modest intraday gains beyond the 200-day SMA.
• The GBP is pressured by a modest USD strength and acts as a headwind for the cross.
• The BoJ rate hike uncertainty keeps the JPY bulls on the defensive and lends support.

The GBP/JPY cross attracts some intraday sellers on Tuesday and retreats over 100 pips from the daily peak, around the 159.35 region amid the emergence of some selling around the British Pound (GBP). Spot prices drop to a fresh daily low during the early European session and currently trade just below the 192.00 mark, down nearly 0.20% for the day.

The US Dollar (USD) gains follow-through traction in the wake of the Federal Reserve (Fed) Chair Jerome Powell's overnight hawkish remains and turns out to be a key factor weighing on the British Pound (GBP). Apart from this, the intraday GBP fall lacks any obvious fundamental catalyst and is likely to remain limited amid expectations that the Bank of England's (BoE) rate-cutting cycle is likely to be slower than in the US and the Eurozone. This, along with the offered tone surrounding the Japanese Yen (JPY), should help limit the downside for the GBP/JPY cross. 

Japan's incoming Prime Minister (PM) Shigeru Ishiba expressed a cautious view about interest rate hikes by the Bank of Japan (BoJ) and said on Monday that he intends to call a general election on October 27. This, along with the optimism over a stimulus bonanza from China, undermines the safe-haven JPY and acts as a tailwind for the GBP/JPY cross. Spot prices, meanwhile, move little following the release of the final UK Manufacturing PMI, which was revised up to 45.0 for September as compared to the 44.8 flash print and the previous month's reading.

Nevertheless, the aforementioned fundamental backdrop makes it prudent to wait for a strong follow-through selling before positioning for any meaningful downside for the GBP/JPY cross. From a technical perspective, the recent repeated failures to find acceptance above the very important 200-day Simple Moving Average (SMA) and the formation of a  'Death Cross' on the daily chart – the 50-day SMA crossing below the 200-day SMA – warrant caution for aggressive bullish traders.