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.
Update: UK wages: +2.4% – GBP falls
Here are all the details, and 5 possible outcomes for GBP/USD.
Published on Tuesday at 8:30 GMT.
Indicator Background
The Average Earnings Index is closely watched by analysts, and an unexpected reading can have a significant effect on the movement of GBP/USD.
The key indicator has been gaining strength in recent readings, and posted an excellent gain of 3.2% in May, within expectations. The estimate for June stands at 2.8%. Will the indicator match or beat the prediction?
Sentiments and levels
The BOE surprised with its vote on a rate hike, and any rate increase in the UK is about a year away. With the US likely looking at a rate increase before the end of the year, the monetary divergence will probably continue to weigh on the pound. Thus, the overall sentiment is neutral on GBP/USD towards this release.
Technical levels, from top to bottom: 1.5909, 1.5769, 1.5682, 1.5590, 1.5485, and 1.5341.
5 Scenarios
- Within expectations: 2.5% to 3.1%. In this scenario, GBP/USD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
- Above expectations: 3.2% to 3.5%: A stronger reading than predicted could push the pair above one resistance line.
- Well above expectations: Above 3.5%: An unexpectedly sharp rise could push GBP/USD upwards, with a second line of resistance at risk.
- Below expectations: 2.1% to 2.4%: A lower than expected reading could pull the pair downwards, with one support level at risk.
- Well below expectations: Below 2.0%: 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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