Story related; can't be missed.
After knocking a head off the hydra in the Encampment, you'll escort Mercedes to Gran Soren. On the way you'll kill a few goblins, destroy a couple harpy, eviscerate some wolves, and finally slay some highway men, but you'll eventually get to, and enter, the capitol.
Just make sure the wagon carrying the hydra head arrives with you and you'll be allowed in.