GBP/USD remains rangebound, trading between 1.2805 and 1.2900, as market participants grapple with Wednesday's Fed rate announcement, as well as UK Brexit and political developments.
For the Fed, markets have priced in nL2N27E0DU a 25bp rate cut followed by a pause well into 2020 FEDWATCH.
That leaves Brexit and early-December UK elections nL2N27E07HnL2N27E065 as traders' main focus for GBP/USD.
Parliament has largely taken a no-deal Brexit off the table, with Morgan Stanley and Goldman Sachs assigning just a 5% chance of such an event nL8N27E3GW.
That leaves makes elections as the potentially biggest source of disruption, and MS and Goldman see a 20% chance of Britain remaining in the EU.
Uncertainty is helping to cap GBP/USD ahead of its Oct. 21 high at 1.3012.
Though polls indicate the Conservatives are expected to remain in control, traders are taking steps to protect against a surprise outcome.
GBP/USD volatility for early December and the Jan. 31 current Brexit deadline has been rising nL2N27E05X.
Bulls remain in control above 1.2714, the 200-DMA.
A close below the 200-DMA may tempt recent GBP short-coverers to re-establish shorts, putting the 30-DMA at 1.2567 and the 55 and 100-DMAs in the low 1.24's in sharper focus.
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