GBP/USD making an early run for 1.3150 as US election results spark risk appetite

• Risk-on being fueled by both Brexit hopes and early US mid-term election results.
• No sight of a Brexit deal on the horizon, but investors are continuing to bet that either the EU or the UK will break and make concessions.

The GBP/USD is trading into the 1.3150 region as broader markets whip under the risk-off/risk-on pressures from US midterm elections, and Brexit concerns have fallen by the wayside heading into Wednesday's London market session as USD flows are, once again, driving the overall market structure.

Developments on Brexit remain scant, but the flow of headlines has continued non-stop, with only five months left until the final Brexit date and the EU-UK divide remains as wide as it always has, with no movement on any solution on the Irish border dispute, nor on how much access the UK will keep to the European customs market post-Brexit. Hopes have pinned to the high side recently, fueled by speculative headlines that a previously-unknown Brexit deal may be forthcoming soon, but those hopes were crushed early in the week when all sides confirmed that they have made no progress on making mutually-beneficial concessions.

US mid-term elections are gripping global financial markets for the time being, and investors are leaning into the Dollar-short camp as the American Democratic party, President Donald Trump's main opposition, looks set to secure a foothold in the US lower House of Representatives.

Little of note is slated for the economic calendar for both the UK and the US in today's latter market sessions, leaving Brexit and American election headlines to control the broader flow of risk appetite heading through Wednesday.

GBP/USD levels to watch

Brexit hopes are keeping the Cable pinned into near-term highs, according to FXStreet's own Yohay Elam: "the GBP/USD is trading at the highest levels since mid-October, and the Relative Strength Index (RSI) on the daily chart is far from the 70 level which indicates oversold conditions. This is one bullish sign. Also, the pair is trading and looks comfortable above the 50-day Simple Moving Average. Downside momentum is diminishing. 

The 1.3250 area capped the pair during several days in the middle of last month. 1.3300 is a round number and also was the peak in September. Beyond these levels, we are back to prices last seen in July, with 1.3360 serving as the next cap.

Looking down, 1.3290 was a swing low in mid-October. 1.3040 separated ranges in October and also in early November. Further down, 1.2960 was a stepping stone on the way up, and 1.2925 was a swing low in early October."