GBP/JPY plummets to 192.20 area, fresh daily low after BoE Governor Bailey's comments

• GBP/JPY witnessed heavy selling in reaction to the BoE Governor Bailey's dovish remarks.
• Bailey said that the central bank could become "a bit more activist" on interest rate cuts.
• Middle East tensions benefit the JPY's relative safe-haven status and weigh on the cross.

The GBP/JPY cross continues with its struggle to find acceptance above the 195.00 psychological mark for the second time in two weeks and retreats sharply from a one-week high touched earlier this Thursday. The downward trajectory drags spot prices to the 192.25-192.20 area during the first half of the European session and is exclusively sponsored by the emergence of heavy selling around the British Pound (GBP). 

In an interview with the Guardian, the Bank of England (BoE) Governor Andrew Bailey said that there was a chance that the central bank could become a bit more aggressive in cutting rates if there's further good news on inflation. Traders upped their bets for another 25-basis points interest rate cut by the BoE at its November meeting. This, in turn, drags UK gilts lower, along with the GBP, and prompts aggressive selling around the GBP/JPY cross.

Apart from this, a further escalation of geopolitical tensions in the Middle East benefits the Japanese Yen's (JPY) relative safe-haven status and contributes to the offered tone surrounding the currency pair. Iran launched over 200 ballistic missiles at Israel on Tuesday, while the latter conducted a precise air strike and bombed central Beirut in Lebanon during the early hours of Thursday, raising the risk of a full-blown war and undermining the risk sentiment. 

The JPY bulls, however, refrain from placing aggressive bets in the wake of the uncertainty over future interest rate hikes by the Bank of Japan (BoJ). In fact, Japan's new Prime Minister Shigeru Ishiba said on Wednesday that the country is not in an environment for an additional rate increase. Adding to this, Japan's newly appointed economy minister, Ryosei Akazawa, expects the BoJ to make careful economic assessments when raising interest rates again. 

Furthermore, BoJ board member Asahi Noguchi stated that the central bank must patiently maintain loose monetary conditions and will make gradual adjustments while carefully assessing whether inflation sustainably reaches the 2% target. This, in turn, warrants some caution before positioning for any further depreciating move for the GBP/JPY cross and supports prospects for an extension of the range-bound price action witnessed since the beginning of the current week.