Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

Free Trading Guides
Please try again

Live Webinar Events


Economic Calendar Events


Notify me about

Live Webinar Events
Economic Calendar Events






More View More
GBP/USD to Mount Larger Rebound on Strong U.K. Labor/Wage Report

GBP/USD to Mount Larger Rebound on Strong U.K. Labor/Wage Report

David Song, Shuyang Ren,


- U.K. Jobless Claims to Contract for 26th Consecutive Month in December.

- Wage Growth to Pick Up for Fifth Month to Annualized Rate of 1.7%.

Trading the News: U.K. Jobless Claims Change

Another 25.0K contraction in U.K. Jobless Claims paired with an uptick in wage growth may spark a larger rebound in GBP/USD as it raises the Bank of England’s (BoE) scope to normalize monetary policy in 2015.

What’s Expected:

GBP/USD Jobless Claims

Click Here for the DailyFX Calendar

Why Is This Event Important:

Despite bets of seeing another 7-2 split within the Monetary Policy Committee (MPC), BoE Governor Mark Carney may continue to prepare U.K. households and businesses for higher borrowing costs as the ongoing improvement in the labor market fuels expectations for a faster recovery.

For more updates, sign up for David's e-mail distribution list.

Expectations: Bullish Argument/Scenario

Producer Price Index- Output n.s.a. (YoY) (DEC)-0.4%-0.8%
Net Consumer Credit (NOV)1.1B1.3B
Retail Sales ex Auto (MoM) (NOV)0.3%1.7%

Lower input costs paired with the expansion in private sector consumption may prompt U.K. firms to expand their labor force, and a slew of positive developments may heighten the appeal of the British Pound as it raises the outlook for growth and inflation.

Risk: Bearish Argument/Scenario

Construction Output s.a. (MoM) (NOV)1.2%-2.0%
Industrial Production (MoM) (NOV)0.2%-0.1%
Purchasing Manager Index Composite (DEC)57.455.2

However, the slowdown in business output may drag on the U.K. labor market, and the BoE may look to further delay normalizing monetary policy as the majority of the MPC remains in no rush to raise the benchmark interest rate off of the record-low.

How To Trade This Event Risk(Video)

Bullish GBP Trade: Claims Slips 35.0K+, Average Hourly Earnings Climbs 0.7% or Greater

  • Need green, five-minute candle following the print to consider a long GBP/USD trade
  • If market reaction favors buying sterling, long GBP/USD with two separate position
  • Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward
  • Move stop to entry on remaining position once initial target is hit, set reasonable limit

Bullish GBP Trade: Job, Wage Growth Disappoint

  • Need red, five-minute candle to favor a short GBP/USD trade
  • Implement same setup as the bullish British Pound trade, just in opposite direction

Read More:

Price & Time: BOJ To Flex Its Muscle?

T-Minus 2: Trade Ideas Before ECB Comes to Town

Potential Price Targets For The Release


GBP/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Long-term outlook for GBP/USD remains bearish as price & RSI retain the bearish trends carried over from 2014.
  • Interim Resistance: 1.5300 (23.6% retracement) to 1.5320 (38.2% retracement)
  • Interim Support: 1.5030 (23.6% expansion) to 1.5033 (January low)

Join DailyFX on Demand for Real-Time Updates on the DailyFX Speculative Sentiment Index!

Impact that the U.K. Employment Change has had on GBP during the last release

PeriodData ReleasedEstimateActualPips ChangePips Change
NOV 201412/17/2014 9:30 GMT-20.0K-26.9K-136

November 2014 U.K. Employment Change


U.K. Jobless Claims declined another 26.9K in November following a 25.1K contraction the month prior, while the ILO Unemployment Rate held steady at an annualized 6.0% for the third consecutive month. Wage growth also picked up to an annualized rate of 1.4% during the same period to mark the fourth straight rise. Despite the ongoing improvement in the labor market, it seems as though the Bank of England (BoE) remains in no rush to normalize monetary policy as the central bank struggles to achieve the 2% target for inflation. The bullish reaction in GBP/USD was short-lived as the pair pulled back towards the 1.5700 handle, and the sterling continued to lose ground throughout the North American trade as the pair ended the day at 1.5572.

--- Written by David Song, Currency Analyst and Shuyang Ren

To contact David, e-mail Follow me on Twitter at @DavidJSong.

To be added to David's e-mail distribution list, please follow this link

Trade Alongsidethe DailyFX Team on DailyFX on Demand

Looking to use the DailyFX Trade Signals LIVE? Check out Mirror Trader.

New to FX? Watch this Video

Join us to discuss the outlook for the major currencies on the DailyFXForums

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.