TheNews

Trading the News: U.K. Jobless Claims Change

Even though U.K. Jobless Claims are projected to increase another 9.0K in July, signs of stronger wage growth may keep the British Pound afloat, with GBP/USD at risk of staging a larger recovery should the data tame market expectation for additional monetary support.

What’s Expected:

Why Is This Event Important:

The Bank of England (BoE) is widely anticipated to further embark on its easing cycle this year as ‘a majority of members expect to support a further cut in Bank Rate to its effective lower bound,’ but the central bank may move to the sidelines after delivering the comprehensive easing packing earlier this month especially as Governor Mark Carney rules out a zero-interest rate policy (ZIRP) for the U.K.

How To Trade This Event Risk

Bullish GBP Trade: U.K. Job/Wage Growth Picks Up

• 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: 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 the opposite direction.

Potential Price Targets For The Release
GBP/USD Daily

• Broader outlook for GBP/USD remains tilted to the downside as it breaks down from the wedge/triangle formation carried over from late-June, with both price and the Relative Strength Index (RSI) largely preserving a bearish formation, but the pair may stage a large recovery over the coming days as it appears to have marked a failed run at the 2016 low (1.2788).
• 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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