GBP/USD: Unemployment, earnings to give clues on services inflation slowdown

UK unemployment data will be released later Tuesday
Average earnings, unemployment and employment change are the key numbers to watch
GBP/USD sits near known support level, providing setup to build trade ideas around

GBP/USD sits near a known support level heading into the latest UK unemployment report, providing a decent setup to build trade ideas around depending on the underlying message from the data.

The key figures

This calendar shows what markets are looking for when it comes to the unemployment rate, claimant count, average earnings and employment change over the past three months. All times show are BST.

Given ongoing uncertainty surrounding unemployment data from the ONS, markets may take their cues from the average earnings ex-bonus figure given the read-through to potential trends in UK services inflation which, at 5.2%, remains well above the Bank of England's broader 2% target.

While the unemployment figure may not carry the same influence as the past, it’s noteworthy that it’s expected to decline to 4.1% in July, moving it away from the 4.4% average expected by the BoE in the September quarter.

GBP/USD setups

Looking at GBP/USD on the daily, you can see the price is siting above 1.30446, a level that has only been lightly tested since being established in July. However, the bounce heading into the jobs report suggests it could be used to build setups around, allowing for a stop to be placed on the opposite side to entry depending on how the price action evolves. Momentum is with the bears with RSI (14) in a downtrend, with that signal confirmed by MACD.

Below 1.30446, resistance may be encountered from 1.29442, coinciding with the intersection of the 50-day moving average and horizontal support. 12880 and 1.2802 are the next levels after that. On the topside, 1.3140 and 1.3266 are the initial levels to watch.

-- Written by David Scutt

Follow David on Twitter @scutty

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