Analysts at TD Securities note the focus for sterling remains very much on the evolving UK political landscape.

• "Investors enjoyed a brief post-election honeymoon when the risk of a no-deal crash out was considered all but eliminated. These hopes have diminished, although we note that the end-2020 potential cliff edge remains far off in the distance.
• Looking forward, we are not convinced that cable's correction from its brief foray above 1.3500 is yet complete. From a purely technical standpoint, we think spot could see a clear break below 1.3050 that takes out this now-important support. If realized, we think this would be driven mostly by positioning factors as we approach year-end as shorter-term participants dial back further on sterling allocations. At the same time, we note that the structural shorts - at least those evidenced in IMM data - have been all but eliminated. This, in our view, tilts the balance in favour of shorter-term sterling sellers overall.
• With an eye on potential resistance in the 1.3225/35 area, we think the first target of a further move lower in cable may be found at the 1.2985 pre-election "melt-up" level. Below this, we note the 55-dma currently comes in at 1.2887, which also closely corresponds with support seen in late-Novemer.
• On a longer-term basis, however, we think sterling is starting to look more attractive from a strategic perspective. We continue to target a move up to 1.40 in cable over the next twelve months."