GBP/USD spikes and retreats, back below 1.2900 handle

   •  GBP pops on news that EU will offer a major Brexit concession to UK PM May.
   •  The uptick lacks any strong follow-through beyond the 1.2900 handle.
   •  Renewed USD buying interest further collaborates towards capping gains.

The GBP/USD pair reversed an early dip to fresh 11-month lows and spiked beyond the 1.2900 handle in the last hour, albeit quickly retreated around 20-25 pips.  

Incoming Brexit headlines continue to play a key role in driving the sentiment surrounding the British Pound, with some positive Brexit development helping the pair to stage a goodish rebound from an intraday low level of 1.2942.

According to a report, via the Business Insider, the EU member states are reportedly willing to consider a Brexit deal, which will allow Britain to remain in the single market for goods while opting out of the free movement of people. The news provided a minor boost to the British Pound and prompted some short-covering move from a support marked by a downward sloping descending trend-channel formation on the daily chart. 

The uptick, however, lacked any strong follow-through as investors believed that any such deal is likely to get rejected in the UK Parliament as it will limit the country's ability to strike a new free trade deal. Adding to this, renewed US Dollar buying interest further collaborated towards keeping a lid on any further up-move, at least for the time being. 

Traders now look forward to the US economic docket, highlighting the release of PPI print and the usual initial weekly jobless claims, in order to grab some short-term opportunities. The key focus, however, would be on Friday's important macro releases from the UK and the US, which include the prelim UK Q2 GDP growth figures and the latest US consumer inflation figures.

Technical levels to watch

Immediate resistance is pegged near the 1.2925-30 region, above which the pair is likely to challenge the 1.2965 horizontal resistance before eventually darting towards reclaiming the key 1.30 psychological mark. On the flip side, the 1.2850-40 zone now seems to protect the immediate downside, which if broken might turn the pair vulnerable to resume with its prior depreciating slide.