TheNews

Trading the News: U.K. Jobless Claims Change

GBP/USD may continue to carve a near-term series of lower highs & lows as U.K. Jobless Claims are projected to increase another 2.0K in October, but a marked pickup in household earnings may heighten the appeal of the British Pound as the Bank of England (BoE) warns ‘monetary policy can respond, in either direction.’

What’s Expected:

Why Is This Event Important:

It seems as though the Monetary Policy Committee (MPC) is gradually move away from its easing cycle as Governor Mark Carney warns ‘inflation is going up. A pass through of a 20% fall in sterling is going to come and will build towards the end of this year and into 2017,’ and the sterling may stage a larger recovery over the near-term as BoE officials argue that ‘there are limits to the extent to which above-target inflation can be tolerated,’ Nevertheless, the MPC appears to be in no rush to remove the highly accommodative stance as the outlook for the U.K. economy remains clouded with high uncertainty, and the British Pound remains at risk of facing headwinds over the coming months as the region prepares to depart from the European Union (EU).

How To Trade This Event Risk
Bearish GBP Trade: Job & Wage Growth Falls Short of Market Forecasts

• Need red, five-minute candle following the report to favor a short GBP/USD trade.
• If market reaction favors a long sterling trade, buy 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.

Bullish GBP Trade: U.K. Employment Report Beats Expectations

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

Potential Price Targets For The Release
GBP/USD Daily

• Will keep a close eye on the recent series of lower highs & lows in GBP/USD following the failed attempt to push above the Fibonacci overlap around 1.2630 (38.2% expansion) to 1.2680 (50% retracement), with the pair at risk of testing channel support especially as the Relative Strength Index (RSI) preserves the bearish formation carried over from May.
• Interim Resistance: 1.2920 (100% expansion) to 1.2950 (23.6% expansion)
• Interim Support: 1.1905 (2016-low) and 1.2100 (61.8% expansion)

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