TheNews

Trading the News: U.K. Jobless Claims Change

Despite expectations for another 10.0K decline in U.K. Jobless Claims, a slowdown in household earnings may undermine the near-term advance in GBP/USD as it drags on interest-rate expectations.

What’s Expected:



Even though the Bank of England (BoE) remains upbeat on the U.K. economy, signs of weak wage growth may encourage Governor Mark Carney to retain the record-low interest rate throughout 2016 as the central bank struggles to achieve its 2% target for inflation.

Nevertheless, the slowdown in global growth paired with easing outputs may drag on the labor market, and a dismal employment report may drag on the exchange rate as market participants push out bets for a BoE rate-hike.

How To Trade This Event Risk

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

• Need green, five-minute candle following the print to consider a long GBP/USD trade.
• If market reaction favors buying sterling, long GBP/USD with two separate position.
• Set stop at the near-by swing low/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.

Bearish GBP Trade: Jobless Claims, Average Hourly Earnings Disappoint

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

Potential Price Targets For The Release
GBPUSD Daily

• Even though GBP/USD largely retains the downward trend carried over from late-August, the bullish divergence in the Relative Strength Index (RSI) may spur a larger correction especially as the pair appears to be carving an inverse head-and-shoulders patter in 2016.
• Interim Resistance: 1.4910 (61.8% retracement) to 1.4930 (38.2% expansion)
• Interim Support: 1.3870 (78.6% expansion) and 1.3960 (50% expansion)

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