GBP/USD: Trading the British Nov 2013

The 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 9:30 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 and the September reading came in at -41.7 thousand,  a multi-year high. The markets are expecting another strong release in October, with an estimate of -33.2K.

Sentiment and Levels

The UK economy continues to pick up steam, and  strong economic releases  could  give a boost to the pound.  Over in the US, NFP was a pleasant surprise, surging in October. This is bound to increase speculation about a December taper, which would be bullish for the US dollar. So, the overall sentiment is  neutral on GBP/USD towards this release.

Technical levels from top to bottom: 1.6247, 1.6125, 1.60, 1.5843, 1.5752 and 1.5648.

5 Scenarios

1. Within expectations: -37.0K 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: -28.9K to -24.0K: A  weaker reading than expected  could send push the pair below one support level.
3. Well above expectations:  Above -24.0K: In this scenario, a second  support level could be broken.
4. Below expectations: -37.1K to -42.0K: A strong reading could push GBP/USD higher, with one  resistance level  at risk.
5. Well below expectations:  Below -42.0K: 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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