GBP/USD: Trading the British Jobs Jun 2014

The UK Claimant Count Change measures the change in the number of people claiming unemployment benefits. It is one of the most important indicators and should be treated by traders as a market-mover.

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 post declines as the economic recovery deepens.  However, the April reading was no as strong as  expected. The release came in at -25.1K, short of the estimate of  -30.7K. The markets are expecting more of the same in the upcoming release, with the estimate standing at -25.0K.

Sentiment and Levels

The pound  continues to trade at high levels, as UK numbers, such as recent PMIs,  continue to point to a deepening recovery. The BOE continues to be coy about a rate increase, but speculation in this regard will continue as statements by BOE policymakers are closely monitored. The US economy is also moving in the right direction, albeit with a few bumps along the way. Nonfarm Payrolls was positive and with the employment picture looking good, the US dollar could make some gains against its major rivals such as the pound.  So, the overall sentiment  remains neutral on GBP/USD towards this release.

Technical levels from top to bottom: 1.7180, 1.6990, 1.6823, 1.6684, 1.66 and 1.6475.

5 Scenarios

1. Within expectations: -21.0K to -29.0K: 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: -20.9K to -16.0K: A weaker reading than expected could send push the pair below one support level.
3. Well above expectations: Above -16.0K: In this scenario, a second support level could be broken.
4. Below expectations: -29.1K to -34.0K: A strong reading could push GBP/USD higher, with one resistance level at risk.
5. Well below expectations: Below -34.0K: Another sharp drop in claims could push GBP/USD past a second resistance level.

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