Global macro overview for 14/06/2017:
The UK job market data has disappointed global investors today. The Claimant Change count (the number of individuals who are out of work and who are claiming some sort of unemployment benefit) increased 7.3K in May from a revised increase of 22K in the previous month and lower than the expected increase of around 12K, but the unemployment rate was steady at the level of 4.6% and the average earnings index rose by 2.1% on a quarterly basis, down from the previous gain of 2.1%. The labor market data are a big disappointment given the apparent slowdown in wage growth, which is particularly worrying due to the rising inflationary pressures. The less than expected growth of applications for the unemployed is still not enough to lift the market sentiment today as the average earnings data will continue to have an important impact on the British pound, especially given the impact on consumer spending and the Bank of England policy.
With the earning weak like this, the Bank Of England will be very reluctant to raise its interest rates anytime soon. Moreover, the decision to hike might be postponed even further if the labor market conditions get worse and the consumer spending will decline. These expectations and the recent political uncertainty developments in the UK regarding the Brexit negotiations might further undermine the sterling and depreciate it even more in the near term.
Let's now take a look at the GBP/USD technical picture on the H4 time frame. The false breakout above the technical resistance zone resulted in a reversal candle in form of a Doji/Shooting Star on the H4 time frame. Despite the oversold trading conditions, the bias remains bearish and the next support is seen at the level of 1.2707 and 1.2633.
