GBP/USD sellers pushed the pound to a 31-month low of 1.2080 , and there are few if any signs that the pressure will abate anytime soon. Though the BoE held rates steady and still sees gradual rate hikes as appropriate, it cut its growth forecasts nU8N1A4002, remaining wary of lingering Brexit and global growth uncertainties.
A smooth Brexit seems an increasingly remote possibility given the gap between London and Brussels, with European officials consistently rejecting PM Johnson's efforts to renegotiate the existing withdrawal agreement nL8N24V6FA nL8N24X6CV.
Rates markets remain skeptical of "gradual" hike and smooth Brexit scenarios, with GBPOIS pricing a slightly greater than 50% chance of a 25bp cut in December and greater than 80% chance of a cut in January 2020 BOEWATCH.
In the meantime, the risks remain the same for GBP/USD -- new elections, no-deal Brexit, a second referendum -- suggesting more losses for cable.
GBP/USD three-month vol now includes the Oct. 31 Brexit deadline, and has moved higher .
Sterling finds weak support at today's low of 1.2080, and then 1.2000 -- due to talk of option interest there.
That's followed by January 2017's low of 1.1983.
The pair may be subject to short-covering rallies but from its current low base resistance at 1.2336, the 10-DMA, appears bulletproof.
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