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British  Average Earnings Index is an inflation index which measures the change in the price of goods and services charged to businesses and labor. A reading which is higher than the market forecast is bullish for the pound.

Update:  UK unemployment falls to 6%, earnings rise  – GBP/USD advances

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

Published on Wednesday at 8:30 GMT.

Indicator Background

Average Earnings Index is a leading indicator of consumer inflation, and an unexpected reading  can affect the direction of GBP/USD. The indicator posted a gain of 0.6% in the previous release, just shy of the estimate of 0.7%.   The forecast remains at 0.7% for the upcoming release.

Sentiments and levels

The markets are expecting interest rate hikes in 2015 in both the US and UK, so key  releases could impact on the timing of such a move by the BoE and Federal Reserve. Much will depend on this week’s CPI and  Claimant Count Change  releases – if they meet expectations, the pound could hold its own against the US dollar..  So, the overall sentiment is  neutral on GBP/USD towards this release.

Technical levels, from top to bottom: 1.6250, 1.6131, 1.6006, 1.6823, 1.5909, and 1.5746.

 

5 Scenarios

  1. Within expectations: 0.5% to 0.9%. 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: 1.0% to 1.4%: A stronger reading than predicted could push the pair above one resistance line.
  3. Well above expectations: Above 1.4%: An unexpectedly sharp rise could push GBP/USD upwards, with a second line of resistance at risk.
  4. Below expectations: 0.0% to 0.4%: A lower than expected reading could pull the pair downwards, with one support level at risk.
  5. Well below expectations: Below 0.0%.  A reading in negative territory could push the pair below a second  support level.

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

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