TheNews

Trading the News: U.K. Jobless Claims Change

A 2.8K rise in U.K. Jobless Claims accompanied with another slowdown in wage growth may generate fresh 2016 lows in GBP/USD as it raises the Bank of England’s (BoE) scope to further delay its normalization cycle.

What’s Expected:



Why Is This Event Important:

The recent comments from BoE Governor Mark Carney suggests that the Monetary Policy Committee (MPC) is in no rush to lift the benchmark interest rate off of the record-low, and the board may continue to endorse a wait-and-see approach at the next policy meeting on February 4 as the central bank head looks for signs of stronger inflation.

Nevertheless, the pickup in private-sector lending along with the rise in household spending may encourage U.K. firms to expand their labor force, and a positive development may spur a greater dissent within the BoE as central bank officials see a ‘solid’ recovery in the region.

How To Trade This Event Risk
Bearish GBP Trade: Jobless Claims Increase, Household Earnings Slide

• Need red, five-minute candle following the print to consider a short GBP/USD trade.
• If market reaction favors selling sterling, short GBP/USD with two separate position.
• Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward.
• Move stop to entry on remaining position once initial target is hit, set reasonable limit.

Bullish GBP Trade: U.K. Job/Wage Growth Beat Market Expectations

• Need green, five-minute candle to favor a long GBP/USD trade.
• Implement same setup as the bearish British Pound trade, just in reverse.

Potential Price Targets For The Release
GBPUSD Daily

• Longer-term outlook for GBP/USD remains tilted to the downside as price & the Relative Strength Index (RSI) retain the bearish formations carried over from the previous year; will continue to watch the downside especially as the oscillator pushes deeper into oversold territory and approaches the lowest level since September 2009.
• Interim Resistance: 1.4860 (78.6% retracement) to 1.4910 (61.8% retracement)
• Interim Support: 1.3870 (78.6% expansion) and 1.4000 pivot

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