GBP/JPY plummets to 8-month lows at 143.20 on risk aversion

• GBP/JPY loses more than 200 pips on Tuesday. 
• The pair is headed for its 8th straight negative daily close.
• Flight-to-safety dictates the price action in the FX market.

After breaking below the 145 handle, the previous 2018 low, the GBP/JPY pair extended its losses to touch its worst level since early September at 143.20 before retracing a small portion of its daily losses. As of writing, the pair was trading at 143.90, down 1.15% on the day.

The risk-off mood amid increasing concerns over the political uncertainty on Tuesday forced investors to seek refuge in traditional safe-havens such as the JPY. The USD/JPY pair lost more than 100 pips and the EUR/JPY tumbled to its worst level in nearly a year at 124.60. Following the sharp drop in major European equity indexes, Wall Street is also looking to end the day substantially lower with the Dow Jones Industrial Average and the S&P 500 losing 1.6% and 1.1% respectively. Furthermore, the CBOE Volatility Index, Wall Street's fear gauge, reached its highest level in over 2 months with a daily increase of 35%.

In the early trading hours of the Asian session, retail trade figures will be released from Japan, which is expected to remain unchanged at 1% on a yearly basis in April. Furthermore, BoJ Governor Kuroda will be delivering a speech. The economic docket in the UK won't be featuring any data on Wednesday and the risk perception is likely to continue to dominate the market movements.

Technical levels to consider

The pair could encounter the first technical support at 143.20 (May 29 low) before extending its downside toward 142.70 (Sep. 11, 2017, low) and 141.20 (Sep. 5, 2017, low). On the other side, resistances align at 145 (psychological level), 146.15 (May 28 high) and 147.25 (May 24 high).