GBP/USD: Trading the British Jobs May 2014

UK Claimant Count Change measures the change in the number of people claiming unemployment benefits. Along with the Unemployment Rate, which is released at the same time, it provides a snapshot of the UK employment sector. A reading which is higher than the estimate is bullish for the pound.

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

Published on Wednesday at 8:30 GMT.

Indicator Background

Job creation is one of the most important leading indicators of overall economic activity. Thus, the publication of employment data is highly anticipated by the markets, and an unexpected reading could affect the direction of GBP/USD.

Employment Change continues to  look sharp.  The  March reading came  in at -30.4 thousand, almost matching the estimate. More of the same is expected, with  the April  estimate  standing at  -30.7K.

Sentiment and Levels

The pound had plenty of punch last week, but  showed little change despite all the movement.  The 1.70 resistance level  remains in place, but came close to falling last week.  Employment data has been solid in both countries, and market sentiment remains positive for both the US and UK economies, as speculation mounts as to when the Fed and BOE will make a move and raise interest rates.  So, the overall sentiment is neutral on GBP/USD towards this release.

Technical levels from top to bottom: 1.7375, 1.7180, 1.6990, 1.6823, 1.6705 and 1.66.

5 Scenarios

1. Within expectations: -34.0K to -26.0K: In this scenario, GBP/USD could show some slight movement, but it is likely to remain within range, not breaking any levels.
2. Above expectations: -25.9K to -23.0K: A weaker reading than expected could send push the pair below one support level.
3. Well above expectations: Above -23.0K: In this scenario, a second support level could be broken.
4. Below expectations: -37.0K to -34.1K: A strong reading could push GBP/USD higher, with one resistance level at risk.
5. Well below expectations: Below -37.0K: Another sharp drop in claims could push GBP/USD past a second resistance level.

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

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