UK Claimant Count Better than Expected

With the revision lower to December’s number, the combined 2-month total is only +8,100!

FOREX 5

The UK’s Claimant Count Change for January was +5,500 vs an expectation of +22,600 and a lower revised December reading of +2,600.   For those keeping track at home, the claimant count measures the change in the number of unemployed over a given month.  This is different than in most countries, where the change in the number of employed is measured.  Therefore,  a lower claimant count is better than expected and a higher claimant count is worse than expected.  With the revision lower to December’s number, the combined 2-month total is only +8,100!  This is stronger than any single month going back almost 2 years.

GBP/USD was already moving higher before the data, however once the pair broke through 1.3000, it was off to the races:

Source: Tradingview, City Index

Price traded as high as 1.3050 before pulling back.  Resistance is 1.3050, then previous highs near 1.3070. 

The move higher came despite comments yesterday from David Frost, the UK’s Brexit negotiator, that the UK will not agree to following EU regulation in exchange for a free-trade agreement and is willing to accept a degree of trade friction. (Reuters).  Price action yesterday snapped a 5-day winning streak.  However today, GBP/USD is on the move higher once again trying to move back inside the apex of the symmetrical triangle on the daily timeframe.  Resistance on the daily now comes in at the downward sloping trendline near 1.3070 (the previous highs mentioned on the 30 minute), then horizontal resistance near 1.3200.  Horizontal support is near 1.2950 and then previous daily lows near 1.2872.

Source: Tradingview, City Index

The strong move higher in the Pound can be seen in EUR/GBP as well.  The pair was already moving lower (stronger GBP) into the data release.  However, after the release, EUR/GBP pushed much lower and is currently testing the 2019 lows at .8275.  Notice however that the RSI is near extreme oversold conditions, indicating price may be ready for a short term bounce.  Sellers will look to add to positions to try and push price below .8275 looking for stops.

Source: Tradingview, City Index

And as we wrote about last week, below there is horizontal support and the 50% retracement level from the July 2015 lows to the summer 2019 highs, near .8115.  Although that level is 200 pips lower, if price does reach it, there are likely to be strong buyers with ahead of that level with stops building below it.  Horizontal resistance is 90 pips higher near .8375.

Source: Tradingview, City Index

Price action for the Pound is going to be more likely driven by comments regarding trade negotiations between the UK and EU (which also may keep data subdued until there are agreements).  Although one data point does not make a trend,  don’t be surprised to see spikes in GBP if data such as this continues to impress.


Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.