Cable is still looking strong as we head towards the first big UK data point of the week and the jobs report
Here’s a rundown of what’s expected;
- March 2018 Claimant count 5k exp vs 9.2k prior
- Feb 2018 ILO unemployment rate 4.3% exp vs 4.3%
- Average weekly earnings 3.0% exp 3m y/y vs 2.8% prior
- Ex-bonus 2.8% exp vs 2.6% prior 3m y/y
- Employment change 33k exp vs 168k prior
Wages will be the main focus of course, and if they do come out as expected, then hike expectations will increase for May and the pound will rally further. Secondary to that will be the Chancellor probably coming out and boasting that wages are above the rate of inflation, which is good for political point scoring. In the real world, look out also for the real annual growth rate for total pay which has been running negative for some time and was at -0.3% last month.
As far as GBPUSD goes, I’m seeing this move more from the USD side than the GBP side so some caution is warranted. Be on guard to see some positioning closer to the data and if anything, I’d be looking for GBP to fall as traders take profits into the risk event. Some might see that as the usual leaked number but because we’ve been rallying so strongly, a sell off into the data would also be a natural reaction.
If the data is soft but not terrible (an unchanged wage number might be taken negatively too), then a dip in this current environment could be swiftly hoovered up. That’s one trade I’m looking at but I’ll have to judge the data at the time.
On the chart the upside is pretty much open for a run up towards 1.45 and the main tech above is the 50 fib of the 2014 drop at 1.4588. Just above there is the 55 MMA at 1.4608. Closer to home I see some possible support levels, which might be minor and won’t likely stand up to bad data, at least until maybe the red line and the 1.4300 handle.