UK jobs report overview

The UK Office for National Statistics (ONS) is scheduled to release the September monthly employment details at 06:00 GMT this Tuesday. With employers reporting record-high job vacancies and the furlough scheme closing at the end of September, the number of people claiming unemployment-related benefits is expected to decline further. Meanwhile, the ILO Unemployment Rate is expected to edge lower to 4.5% during the three months that ended in August from 4.6% previous.

Further, the UK labor market report is expected to show that average weekly earnings, including bonuses, during the three months to August, decelerated sharply from 8.3% to 7%. Excluding bonuses, the wage growth is seen falling to 5.9% during the reported period from the 6.8% increase recorded previously.

How could the data affect GBP/USD?

Given that the Bank of England officials recently signalled about an imminent interest rate hike, a stronger than expected report should be enough to provide a fresh lift to the British pound. That said, the market reaction is likely to be limited amid the prevalent US dollar buying interest, bolstered by hawkish Fed expectations.

Conversely, a weaker reading might prompt aggressive selling and turn the GBP/USD pair vulnerable to extended the previous day's retracement slide from near two-week tops. This, in turn, suggest that the path of least resistance for the major is to the downside.

Meanwhile, Eren Sengezer, Editor at FXStreet, offered a brief technical outlook for the major: “GBP/USD continues to hold above the ascending trend line coming from late September. The 100-period SMA on the four-hour chart is reinforcing this line and forms strong support at 1.3620. As long as buyers continue to defend this level, the pair could target 1.3700 (psychological level, 200-period SMA on the four-hour chart).”

Eren also outlined important technical levels to trade the GBP/USD pair: “Although a daily close above this resistance is likely to open the door for additional gains toward 1.3750 (September 23 high), the Relative Strength Index (RSI) indicator on the four-hour chart could rise above 70. In that case, the pair might need to stage a technical correction before the next leg up. On the flip side, supports are located at 1.3620, 1.3560 (50-period SMA) and 1.3500 (psychological level).”

Key Notes

  •  GBP/USD Forecast: 1.3700 a reachable target ahead of UK jobs report

  •  GBP/USD Weekly Forecast: Ready to plunge again? US inflation, UK jobs and ongoing energy issues eyed

  •  GBP/USD bears take control below key hourly counter trendline

About UK jobs data

The Claimant Change released by the National Statistics presents the number of unemployed people in the UK. There is a tendency to influence the GBP volatility. Generally speaking, a rise in this indicator has negative implications for consumer spending which discourage economic growth. Generally, a high reading is seen as negative (or bearish) for the GBP, while a low reading is seen as positive (or bullish).