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GBP/USD: Trading the British Wages Sep 2015

British  Average Earnings Index, released each month, is  a leading  of consumer inflation. A reading which is higher than the market forecast is bullish for the   pound.                                                                                                            

Here are all the details, and 5 possible outcomes for GBP/USD.

Published on Wednesday at 8:30 GMT.

Indicator Background

The Average Earnings Index is closely watched by analysts, and as a key indicator, an unexpected reading can have a significant effect on the movement of GBP/USD.

The indicator softened in June, posting a gain 2.4%, compared with 3.2% a month earlier. Little change is expected in the July report, with an estimate of 2.5%.

Sentiments and levels

The pound has had an awful few weeks, but reversed directions  last week  and posted  a strong rally  against the greenback.  Will the Fed press the rate trigger this week?  Even if the Fed  plays it  safe and doesn’t make a move, hawkish talk from Yellen could  bolster the  greenback against the pound. Thus, the overall sentiment is  neutral on GBP/USD towards this release.

Technical levels, from top to bottom: 1.5682, 1.5590, 1.5485, 1.5341, 1.5269, and 1.5163.

5 Scenarios

  1. Within expectations: 2.2% to 2.8%. In this scenario, GBP/USD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
  2. Above expectations: 2.9% to 3.3%: A stronger reading than predicted could push the pair above one resistance line.
  3. Well above expectations: Above 3.3%: An unexpectedly sharp rise could push GBP/USD upwards, with a second line of resistance at risk.
  4. Below expectations: 1.7% to 2.1%: A lower than expected reading could pull the pair downwards, with one support level at risk.
  5. Well below expectations: Below 1.7%:  In this scenario,  the pair could break below a second  support level.

For more on the pound, see the GBP/USD forecast.

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Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.