The U.K. economy is expected to have lost another 116,000 jobs following February’s 138,400 which were the most since 1971. This is expected to bring the unemployment rate to 6.7%, which would be the highest since October, 1997. the U.S. and Europe has seen their unemployment rates reach above 8.0%, more layoffs may be in store.
[B]Fundamental Outlook[/B]
The U.K. economy is expected to have lost another 116,000 jobs following February’s 138,400 which were the most since 1971. This is expected to bring the unemployment rate to 6.7%, which would be the highest since October, 1997. Considering the U.S. and Europe has seen their unemployment rates reach above 8.0%, more layoffs may be in store. Employment data generally tends to be a lagging indicator for the economy as companies are reluctant to let go workers until there are clears signs of weakness. However, until we see these numbers peak, further deterioration in the economy will be expected. The U.K. derives a considerable amount of its growth domestically and mounting job losses will only push out recovery expectations. This could weigh on the pound over the short-term which would validate the bearish technical outlook. Therefore, another month of triple digit job losses would justify a short GBP/USD trade.
[B]Technical Outlook [/B]
Cable has dropped beneath 1.4579 as well as a support line that had held since early March. The downside is favored and the next potential chart level support is not until 1.4110. At the current juncture, the GBPUSD is at a short term resistance line. A push above there exposes a congestion area that begins at 1.4700. Structurally, a flat could be complete at 1.5072 as a 4th wave (and price is heading lower for a break beneath 1.35).
For More Technical Analysis Visit the Daily Technical Report
[I]To discuss this report contact John Rivera, Currency Analyst: [email protected][/I]
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