Beginner Traders' Corner−−−−−−−−−−GBP/USD Making a Move Out of Consolidation
Basil Fayadh from eToro USA at 02/16/10
GBP/USD has made a break over the 1.5740 resistance area that it has been trading under over the last week where it had failed 3 times to break out of in its range from last week. Resistance (R1) is seen at 1.5800 which is the 50% Fibonacci retracement level and on to 1.5860 (R3) with the last stop being 100% retracement at just over 1.6050/60. GBP is coming off Alistair Darling's response to Mervyn King's letter. The Bank of England had stated that inflation rose to 3.2 percent in February causing a letter to explain this inflationary push and a 14 month high for the United Kingdom. This had initially caused the Cable to dip and tomorrow we are looking at the UK's version of jobless claims with their Claimant Count expected at -14.6K at 4:30 a.m. Eastern Standard Time. This number has not been positive since November 2009 which is actually good for the British economy showing that there is a decrease in the number of people claiming for unemployment benefits. Most analysts are expecting these numbers to be fairly dismal which may kick the pair below the key support level mentioned earlier. Later in the day we'll move onto the Federal Open Market Committee meeting minutes and onto U.S. CPI (inflationary indicator) later this week. All in all, it may be useful to keep a sharp eye on any negative GBP data, and positive U.S. data to put the pair into overdrive for the week.
See the complete GBP/USD high impact fx calendar here
The views in this post are strictly opinion and are not to be misconstrued as trading advice of any kind. For more info please e-mail me at basil@etorousa.com. Charts powered by FX Solutions Accucharts.
Terms by FX Words:
Claimant Count - UK
The Claimant Count is the UK's most timely measure of unemployment. The report measures the number of people who claim unemployment benefits, but actively seeking work. The Claimant Count serves as a barometer for the health of the UK labor market. Higher job growth accompanies economic expansion and could spark inflationary pressures.
The headline number is a percentage change in the figure.
Relevance: 
Rarely affects markets
Release schedule : 8:30 (GMT); monthly, usually in the middle of the month.
Revisions schedule : None. (Sample error is rare)
Source of report : Office for National Statistics
Web Address : http://www.statistics.gov.uk/
Address of release : http://www.statistics.gov.uk/instantfigures.asp
Refer > Labour Market > Claimant count (Jobseeker's Allowance)
United States | Euro-Zone | Japan | United Kingdom | Canada | Switzerland | Australia | New Zealand Economic Reports by Release Type
Balance of Payments | GDP & Output | Conf & Sentiment | Prices, Wages & Spending | Monetary Policy | Housi
Consumer Price Index (CPI) The Consumer Price Index is one of the leading economic gauges to measure the pace of inflation. Simply put, CPI measures the acceleration of price in a fixed basket of goods and services. Higher CPI indicates that prices of the basket as a whole have increased and as such, it costs more of the local currency to buy the same basket of goods. CPI is also broken down to a core level which strips out the volatile components of the index, which usually include food and energy, but this various by country. Usually, central banks pay far greater importance to the core numbers than the headline numbers. Excessive inflation will induce a central bank to consider raising interest rates while falling inflation would give them the flexibility to lower interest rates.
Differences in CPI
Because each country has different living standards and
consumption habits, each country has a unique CPI with different
baskets of goods and services. Each country may also choose to
benchmark their prices to different years, reflective of differing
monetary policy for each country's central bank.
Thus comparing one country's CPI to another is never perfect - 2.0% inflation in the US may be different than 2.0% CPI in Japan . However economist and traders pay attention to developing trends in inflationary figures -specific to the country- to help forecast future rates.
Core CPI
Because excessive volatility may exist for certain components
of CPI, countries may release "Core" CPI figures, which control for the
most volatile goods and services. Components excluded from Core CPI
usually consist of fresh food and energy, but will vary from country to
country. Many countries also release seasonally-adjusted CPI figures,
as prices can fluctuate with seasonal regularity.
Recent CPI Reports and Analysis from DailyFXUnited States Consumer Price Index | Canadian Consumer Price Index (CPI)
UK Consumer Price Index (CPI) | Euro-Zone Consumer Price Index (CPI)
French Consumer Price Index |Consumer Price Index - Germany | Consumer Price Index (CPI) - German Six States
Consumer Price Index (CPI) - Switzerland | Australian Consumer Price Index (CPI)
