GBP/USD is almost flat on the day, hugging the 200-hour MA
With Carney's testimony just beginning now and likely to offer little, all eyes are on the UK labour market report at the bottom of the hour. Wages are once again the key thing to look at, so what should you expect from the data?
The average weekly earnings for May is expected to come in at +2.5% (similar to prior) while the ex-bonus reading is expected to fall slightly to +2.7%. Meanwhile, the unemployment rate is expected to hold steady at 4.2%.
The usual applies for sterling where a beat = good, and a miss = bad. However, regardless of the reading today (unless it misses way beyond estimates), expect sterling to be bought on dips.
The market is expecting a rate hike in August now, and some tempering of those expectations here would not derail a rate hike surely. The BOE has already positioned itself to prepare for a rate hike so unless data slides tremendously (like we saw in April) then it's almost a given that they will proceed with one.
So, while the data may not offer much if within expectations, the fact that it won't derail the expectations of a rate hike means it is a positive in itself.
Here are the key levels to look out for in cable ahead of the release:
Support
- 100-hour MA @ 1.3219
- Bids at 1.3200
- 9 July support at 1.3190
- 4 July support at 1.3171
- Lows near 1.3100
Resistance
- Day's high @ 1.3260
- Resistance region between 1.3280 to 1.3300
- Resistane @ 1.3350
