UK jobs preview: What to expect of GBP/USD?

The GBP/USD pair extends its struggle to rise above 1.25 handle into early Europe, with the bulls underpinned by a broadly lower US dollar and resurgence of risk-on trades.

Focus now remains on the UK labor market report due to be published by the Office for National Statistics (ONS) 9.30GMT later in the European session ahead.

Jobless claims to increase in Oct

UK labor market report is expected to show that the number of people seeking jobless benefits to have climbed by 2.3k in the three months to October, compared to an increase of 0.7k booked in the three months to September.

The unemployment rate is expected to remain at 4.9% during the period.   Average weekly earnings, including bonuses, in the three months to Sept are estimated to remain unchanged at 2.3%. While ex-bonuses also the wages are expected to stay flat at 2.3%.

Analysts at TDS note, “We don’t expect to see much weakness yet though, with jobless claims remaining close to flat. Although with the unemployment rate coming in at 4.949% for August, the risk of it edging up to 5.0% is higher than the risk of it slipping to a new post-crisis low of 4.8%.”

Deviation impact on GBP/USD

Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 20 and 60 pips in deviations up to 2 to -4, although in some cases, if notable enough, a deviation can fuel movements of up to 85 pips.

GBP/USD: Key technical levels to watch on UK data

Haresh Menghani, Analyst at FXStreet noted, “On daily chart, the pair is oscillating within a short-term ascending trend-channel and has been able to defend 20-day SMA support. Hence, a move back above 1.2500 psychological mark is likely to boost the pair immediately towards 1.2535-40 resistance area, marking 38.2% Fibonacci retracement level of 1.3445-1.1980 downfall.”

“On the downside, weakness below 1.2435 (session low) is likely to find support near 1.2400-1.2380 area, which if broken decisively seems to drag the pair immediately towards 20-day SMA support near 1.2350 region, also nearing 23.6% Fibonacci retracement level.”

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