GBP/USD: Trading the UK Claimant Count September 2013

The UK Claimant Count Change measures the change in the number of people claiming unemployment benefits. Along with the Unemployment Rate, which is released at the same time, it provides a snapshot of the UK employment sector. A reading which is better than the estimate is bullish for the pound.

Here are the details and 5 possible outcomes for GBP/USD.

Published on Wednesday at 8:30 GMT.

Indicator Background

Job creation is one of the most important leading indicators of overall economic activity. Thus, the publication of employment data is highly anticipated by the markets, and an unexpected reading could affect the direction of GBP/USD.

Claimant Count Change has been looking very strong, with increasingly large declines. The July release came in at -29.3 thousand, the best reading since June 2011. This easily beat the estimate of -29.2 thousand. The estimate for the August release is not quite as low, with a forecast of -21.2 thousand.

Sentiment and Levels

The pound has looked sharp in September, and took full advantage of  last week’s excellent PMI releases. The UK economy is picking up steam, which is good news for the British currency. Over in the US, the Federal Reserve hasn’t given many clues as to when it might begin QE tapering, but speculation is increasing that the Fed could take action later in September. As well, market sentiment remains positive about the US economy. So, the overall sentiment is neutral on GBP/USD towards this release.

Technical levels from top to bottom: 1.5944, 1.5832, 1.5752, 1.5648, 1.5550 and 1.5648.

5 Scenarios

  1. Within expectations: -24.0K to -21.0K: In this scenario, GBP/USD could show some slight movement, but it is likely to remain within range, not breaking any levels.
  2. Above expectations: -28.0K to -24.1K: A strong reading would indicate unemployment continues to drop, and could send the pair above one resistance level.
  3. Well above expectations: Below -28.0K: Such a scenario could bolster the pound, and two levels of resistance could be broken.
  4. Below expectations: -20.9K to -17.0K: A weak reading could push the GBP/USD downward, with one support level at risk.
  5. Well below expectations: Above -17.0K: A smaller decrease than expected could shake confidence in the UK economy, and GBP/USD could break two support levels.

For more on the pound, see the GBP/USD.

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