British Average Earnings Index, released each month, is a leading indicator of consumer inflation. A reading which is higher than the market forecast is bullish for the pound.
Updates:
Here are all the details, and 5 possible outcomes for GBP/USD.
Published on Wednesday at 9:30 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 has been steady and posted two straight readings of 3.0%. The markets are expecting a reversal in October, with an estimate of 2.5%.
Sentiments and levels
The widely expected Fed rate hike has seen the US dollar post gains against a host of rivals, but the British pound has held its own in the past few weeks. Recent British releases have been OK, although the UK economy is not as strong as that of the US. So, the overall sentiment is neutral on GBP/USD towards this release.
Technical levels, from top to bottom: 1.5341, 1.5269, 1.5163, 1.5026, 1.4856 and 1.4752.
5 Scenarios
- 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.
- Above expectations: 2.9% to 3.3%: A stronger reading than predicted could push the pair above one resistance line.
- Well above expectations: Above 3.3%: An unexpectedly sharp rise could push GBP/USD upwards, with a second line of resistance at risk.
- Below expectations: 1.8% to 2.1%: A lower than expected reading could pull the pair downwards, with one support level at risk.
- Well below expectations: Below 1.8%: 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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