GBP/USD: Trading the British Jobs Nov 2011

The  British Claimant Count Change measures the change in the number of people claiming unemployment benefits. Along with the Unemployment Rate indicator, which is released at the same time, it provides a snapshot of the employment situation and is a market-mover for GBP/USD.    

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

Published on Wednesday at 9:30 GMT.

Indicator Background

Analysts view the data measured by the Claimant Count Change as extremely important, as the economy cannot grow without job creation. An indicator reading which is lower than the market forecast is bullish for the pound.

October’s reading came in at 17.5K, which was below the forecast of 24.7K. This was the second month in a row where the indicator beat the market’s forecast. On the negative side, the actual number of jobless claims has risen for seven consecutive months. The market prediction for November calls for another increase, up to  20.8K.

 Sentiment and Levels

The British pound has been hurt by the Euro Zone debt crisis, and jittery markets and nervous investors in Europe will likely continue to affect the currency. Economic indicators are mixed, but an increase in the trade deficit could spell trouble for the pound. So, the overall sentiment is bearish on GBP/USD towards this release.

Technical levels from top to bottom: 1.6166, 1.6110, 1.60, 1.5910, 1.5850, 1.5780 and 1.5633.

5 Scenarios

1. Within expectations: 20K to 29K: 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: 16K to 19.9K: A reading lower than expectations would be a welcome positive sign of the health in the British economy, and could send the pair above one resistance level.
3. Well above expectations: Below 16K: A sharp drop in unemployment figures could trigger a rally, and two levels of resistance can be broken.
4. Below expectations: 30K to 34K: A reading higher than expected could push the GBP/USD downward, with one level at risk.
5. Well below expectations: Above 34K: A severe loss of jobs will shake confidence in both the economy and the pound, and GBP/USD could break two support levels.

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