For the pound over the next few weeks, it's a straight shootout between a Brexit extension or a no-deal Brexit to determine the fate of the currency in the short-term.
Overwhelming fear that the latter remains a prospect is keeping sellers in the game and that has seen cable slip towards the 1.2200 handle yesterday and as we begin trading today.
The key support level for the time being remains the 61.8 retracement level @ 1.2197 and that is more clearly seen by the hourly chart:
As it stands, sellers need to break below that level and hold below 1.2200 in order to keep price action on the more bearish side.
Meanwhile, for buyers, there is much work that needs to be done. The near-term control continues to favour sellers and until price finds its way towards the key hourly moving averages near 1.2296-99, that will remain the case.
I still don't view a Brexit deal before 31 October as being a plausible outcome so it is game of binary choice for the pound from hereon.
Currently, markets are saying that risks of a potential no-deal Brexit is too difficult to ignore and that puts sellers in the driver's seat.
However, if we start moving towards a possible extension, I reckon that will lend a short-term relief to the pound targeting 1.2500 and potentially the September high at 1.2582 on a short squeeze before reality settles in again.