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Trading News Events: U.K. Jobless Claims

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by , 07-20-2016 at 08:50 AM (1028 Views)
      
   
Trading the News: U.K. Jobless Claims Change

Even though U.K. Jobless Claims are projected to increase 4.0K in June, another pickup in household earnings may generate a bullish reaction in GBP/USD as it highlights an improved outlook for growth and inflation.

What’s Expected:

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Why Is This Event Important:

Signs of stronger wage growth may prompt the Bank of England (BoE) to retain its current policy at the next interest-rate decision on August 4 as the central bank runs the risk of overshooting the 2% inflation-target, and Governor Mark Carney may attempt to buy more time even as the U.K. prepares to leave the European Union (EU).

How To Trade This Event Risk

Bullish GBP Trade: Job/Wage Growth Picks Up in June

  • 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: U.K. Labor Market Report Fails to Meet Market Forecast

  • 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
GBP/USD

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  • The string of failed attempts to closes back above 1.3360 (50% expansion) to 1.3370 (78.6% expansion) may invalidate the inverse head-and-shoulders formation carried over from the previous month, with the pair at risk of giving back the rebound from 1.2788 as the pair appears to be carving a near-term high.
  • Key Resistance: 1.4880 (50% retracement) to 1.4930 (38.2% expansion)
  • Key Support: 1.2460 (61.8% expansion) to 1.2500 pivot


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