UK jobs preview: What to expect of GBP/USD?

The GBP/USD pair makes a minor-recovery attempt from daily lows and now looks to regain 1.4450 levels ahead of the crucial UK jobs data. All eyes now remain on the UK labour market report from the Office for National Statistics due for release at 8.30GMT this Wednesday, with markets expecting a bit of a cooling off in the employers’ hiring sentiment.

Wages to tick down in the March quarter

The UK employment data is expected to show the number of unemployed people by 21,000 to 1.7 million in the three months through February, increasing from the previous three months for the first time since the middle of 2015.

While the unemployment rate in March is seen steady at 5.1%. The number of people registering for unemployment claims is expected to have risen again in April, although at a slower pace than a month before (6.7K in March versus 2.1K expected in April).

Wage price growth is expected to drop to 1.7% in March. Earnings growth, excluding bonuses, is seen ticking up slightly to 2.3% from 2.2% a month before.

Markets have already started pricing-in a weaker UK jobs report, with the cable extending to the downside near hourly 200-SMA located near 1.4430 region, which acts as a key confluence zone.

A worse-than expected UK employment report could accentuate the downside in the GBP, knocking-off GBP/USD towards 50-DMA at 1.4360. On the flip side, in case the data surprises to the upside, a test of 1.45 handle is likely. Although in both cases, the reaction is expected to be more of a knee-jerk one, as the main driver for today remains the FOMC April meeting minutes.

GBP/USD: Key technical levels to watch on UK data

At 1.4440, the pair has an immediate resistance at 1.4487/1.4500 (20-DMA/ round number), above which 1.4524 (May 17 High/ daily R1) would be tested. On the flip side, support is seen at 1.4400 (round figure) below that at 1.4360 (50-DMA).