MUFG Research discusses GBP/USD outlook ahead of the UK Dec-12 General Elections.

"The likelihood of the GBP suffering a setback in the run up to the election has now been reduced although certainly not eliminated. It will still be difficult for cable to break above 1.3000 until there is more clarity. Public opinion polls would need to shift decisively to trigger a more volatile GBP. It has not happened yet broadly, although we note Britain Elects Poll Tracker shows the gap closing. Downside risks for GBP would increase if the gap starts to narrow across a wider number of polls, which would increase political uncertainty. It would open up GBP more to weakness coming through from the UK economy. Key support for cable is located at 1.2800, and then at 1.2700, the 200-day moving average," MUFG adds.