GBP/USD: Trade setups for today’s important US jobless claims update

US initial jobless claims data later Thursday will receive far more interest than usual
GBP/USD sits near a key level, providing decent trade setups depending on how the price action evolves
Most Federal Reserve speakers on Thursday lean hawkish, although that creates asymmetric risks should one or some flip dovish

GBP/USD one to keep on the radar

US jobless claims data will garner far more interest than usual later Thursday as traders assess whether last week’s unusually large increase was an anomaly or start of a new trend. Testing a key level on the charts, two-way risk created by the data makes GBP/USD a pair to keep on the radar.

This jobless claims report is important

Before we look at trade setups, it’s worthwhile revisiting why the jobless claims data today is important. Last week, outside of holiday periods that can create one-off volatility in the series, the number of first-time unemployment benefit recipients spiked to 231,000, the highest number since August 2023.

The outcome was higher than even the most pessimistic forecaster polled by Reuters, and significantly above the low 200,000 figures seen consistently since the start of the year. While the spike could be interpreted as the start of a rapid deterioration in the US labour market, it may reflect claims being provided to workers temporarily stood down in New York state. If that is the case, the large increase could easily reverse today.

But nobody knows for sure, ensuring the release will dominate at the start of the North American session. Economists look for a decline to 220,000, which comes across as hedging their bets.

Source: Refinitiv

GBP/USD location generates decent setups

The reason I’ve nominated GBP/USD as a pair to watch is simply because of where it sits on the charts.

Sitting in an uptrend having rebounded from 1.2300 over the past month, it now finds itself testing 1.2700, a level it has done plenty of work either side of this year, including two failed attempts at a bullish break in April. Given its history around this level, it provided a decent trade setup to either buy a break or sell another failure, depending on what happens when the data is released.

Should 1.2700 give way, traders could initiate longs with a stop loss order below the level for protection. The initial trade target would be 1.2800, with the YTD high of 1.2894 the next after that. Alternatively, should 1.2700 hold, traders could sell with a stop above targeting a retracement lower. 1.2635 – the high struck on May 3 – would be the first target with the 50-day moving average located just below 1.2600 the next after that.

Should the price move in your favour post entry, you could consider lowering your stop to entry level, essentially creating a free trade.

The fine print

There are several second-tier US releases out at the same time as the data such as building permits, housing starts, trade prices and the Philly Fed manufacturing index, although none loom as being anywhere near as interesting to traders. Industrial production 45 minutes later may be more influential given market sensitivity to weak activity data right now.

On the central bank front, Megan Greene from the BoE will discuss UK labour market trends at midday London time. The BoE Financial Stability is not likely to be market moving when released at 9am in London.

On the Fed front, the schedule is loaded with FOMC members who typically lean hawkish with Barr, Barkin, Harker, Mester and Bostic doing the rounds. While that suggests they may push back on some of the market moves seen on Wednesday, such an outcome should be largely factored in. If anything, the cast of hawks creates asymmetric risks should one or some flip dovish.

Good luck!

-- Written by David Scutt

Follow David on Twitter @scutty

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the market you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.