April’s data for the UK Claimant Count Change will be released tomorrow at 6 am UTC. The market expectation is for the number of first-time applications for the UK unemployment benefits to have risen to 150,000, which would be higher than the 12,100 witnessed last month and also higher than the previously recorded peak at 138,600 seen in February 2009 at the height of the global financial crisis.
So far, similar reports from the US, Australia, Canada, and even the previous number from the UK failed to elicit any noticeable selloffs in the home currencies. This indicates that markets have generally priced in the numbers and prefer to focus on the impact of the stimulus packages of the various central banks, and also place hopes of economic recovery as lockdowns are lifted.
The deviation to work with would be the differential between the previous number and the consensus number, which is 137,900. I would expect the GBPUSD to see some noticeable downside pressure if the UK Claimant Count exceeds 288,000.
On the other hand, if figures are not significantly higher than the consensus, this may be interpreted as a setback that the UK economy can shake off. The GBPUSD may experience only a slight drop in this circumstance.
A figure which is significantly lower than 125,000 could boost the GBPUSD as it would indicate that the worst may probably be over as far as the unemployment situation from the coronavirus pandemic is concerned.
Download our Q2 Market Global Market Outlook
Technical Outlook for GBPUSD
Today’s upside on the GBPUSD has enabled its daily candle to form a piercing pattern, along with Friday’s candle. The divergence, as well as the bounce of the candlestick pattern on the 1.21210 support line, is visible. This line corresponds to the price projection from the neckline breakdown that completed the double top pattern.
If the UK Claimant Count is far less than projected (closer to last month’s figures than to the market consensus), then we can expect the GBPUSD to build on the technical setups to push towards 1.23695, with 1.25771 remaining a valid upside target.
On the flip side, if the UK Claimant Count is closer to 300,000 (or even exceeds it), we may see a selloff on the GBPUSD which could negate the technical setups and cause further decline towards 1.20005. 1.18810 comes close as additional price support.
There is also the possibility that the pair may remain range-bound, with 1.23695 price level acting as the ceiling and 1.22210 acting as the floor.
Don’t miss a beat! Follow us on Telegram and Twitter.
More content
- Download our latest quarterly market outlook for our longer-term trade ideas.
- Follow Eno on Twitter.
- Do you enjoy reading our updates? Become a member today and access all restricted content. It is free to join.