Today is the big day for the GBP. The economic data from the UK has been pointing down in the recent weeks and the services numbers offered the last big miss, which counts a lot, knowing the large share of this service in the British economy.
But, the earnings (or wages) still offer a ray of hope for GBP bulls. The earnings report is very important because it relates to how much money Britons have available to spend, which has an effect on all sectors of the British economy.
The average earnings index missed expectations by 0.3% in the last reading, so another soft number won´t be such a big surprise, considering this recent reading.
Nonetheless, the GBP would find it hard to hold up, because this would be the last domino to fall after manufacturing, construction, and services.
You can see that the downside is much more at risk just by watching the hourly GBP/USD chart yesterday. This forex pair lost around 90 pips after neutral comments from some BOE member.
The consensus is for a 1.8% reading. I think that even if the actual number comes in as expected, GBP pairs will take a 100 pip trip southward (except for the EUR/GBP, of course, which moves higher when the pound weakens).
The surprise will be if the number comes above 2%. We would normally see a jump in the GBP/USD but I think it will be short lived. If that scenario takes place we will be looking to sell around 1.2950.
Fancy a jump to the trend line so we can sell?
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