UK Claimant Count Preview: Implications for the GBPUSD

Summary:
• The GBPUSD and the UK labour conditions are in focus tomorrow as the UK Claimant Count and unemployment rate data are released to the markets.

On Tuesday, April 21, at 6 am UTC, the data showcasing the UK Labour market conditions will be released. These data consist of the UK Claimant Count Change and the unemployment rate. The unemployment rate is expected to remain at 3.9%; same as last month’s figure. The previous reading on the Claimant Count change was 17.3K, which at the time was worse than the markets expected. 

Though considered a lagging indicator in the UK, these data sets could provide some information as to the effects of the coronavirus pandemic on UK businesses and households. UK unemployment continues to remain at historically low levels, with the present levels concurring with the dip of April 1973. 

This time around, traders may want to know if the lockdowns and shuttering of businesses have had a more substantial impact on the employment situation in the UK. It would also be interesting to see the extent of any such effects. The lockdowns have been extended, which means that markets may use tomorrow’s data set as a barometer to measure the impact of the lockdown extension on UK employment. 

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Technical Outlook for the GBPUSD

Though not considered historically as a significant market mover, tomorrow’s data may see a more substantial response than has been the case, if the numbers have enough deviation to be considered tradable. 

A rise in the unemployment rate to 4.1% as well as an increase in the claimant count may be enough for a short-term selling opportunity on the cable. This could present 1.23695 as the immediate downside target. However, a selling opportunity would only honestly present itself if there is enough downside momentum to break down 1.23695, which then offers new destinations at 1.22006 and 1.21210. 

On the flip side, a reduction in the Claimant Count and a drop or static unemployment rate could allow the GBPUSD aim for the 1.25771 price target, with distant targets located at 1.27558 and 1.28280 if the cable can gain enough momentum to the upside. This move could also get propulsion from a bounce off the 1.23695 support.