GBP/USD rallies beyond 1.3100 mark and then retreats on Brexit headlines

   •  UK PM May said to compromise on Irish border and prompts some aggressive buying.
   •  Further gains, however, remained limited and the pair quickly retreats around 30-pips.

The GBP/USD pair reversed a dip to the 1.30 neighborhood and rallied over 100-pips to levels beyond the 1.3100 handle in the last hour, albeit quickly retreated few pips thereafter. 

With investors looking past towards better than expected UK manufacturing PMI, the pair retreated over 40-pips from the European session high level of 1.3059 and was being weighed down by a modest US Dollar rebound. 

A fresh wave of an upsurge in the US Treasury bond yields underpinned the USD demand and turned out to be one of the key factors exerting some fresh downward pressure during the mid-European session. 

Meanwhile, the latest Brexit headlines, saying that the UK might compromise on Irish border to get Brexit deal prompted some aggressive short-covering move around the British Pound and lifted the pair sharply higher. 

The rally, however, lacked any strong follow-through as the same is expected to be conditional on the UK having full access to the EU customs union and would only apply as a last resort in case a deal isn't reached. 

The pair now is now trying to stabilize around the 1.3090-85 region as market participants now look forward to the US economic docket, highlighting the release of US ISM manufacturing PMI for some fresh impetus.

Technical levels to watch

Any subsequent up-move is likely to confront fresh supply near 100-day SMA, around the 1.3130 region, above which the pair is likely to make a fresh attempt towards reclaiming the 1.3200 round figure mark.

On the flip side, weakness back below the 1.3070-65 region might continue to find immediate some support near the 1.30 handle, which if broken might turn the pair vulnerable to extend the downfall in the near-term.