The number of people filing for unemployment benefits in the United States last week rose more than expected, fresh figures from the Department of Labor revealed on Thursday. Initial jobless claims grew by 14,000 to 266,000 in the week ended July 23, compared to the previous week's revised figure of 252,000, while market analysts expected jobless claims to rise by 9,000 to 261,000 in the reported week. Nevertheless, the less volatile and closely watched four-week moving average fell 1,000 to 256,500 in the preceding week, the lowest level since April. Furthermore, this week marked the 73rd consecutive week of initial jobless claims remaining below the 300,000 level, the longest streak since 1973. Meanwhile, the number of people continuing to receive unemployment aid increased by 7,000 to 2.14 million in the week ended July 16, whereas the four-week average of continuing jobless claims dropped to the lowest level since November 2000.
The Federal Reserve said on Wednesday that conditions in the US labor market improved significantly and that the latest indicators pointed to some increase in labor utilization. As markets expected, the US central bank left its key interest rates unchanged at its meeting on July 27, citing concerns over low inflation.
US GDP is the most important event today
GBP/USD risks suffering more losses
Yesterday the Cable behaved according to expectations, as the immediate support cluster succeeded in limiting the losses. Technically, the GBP/USD pair should now rebound and end the week with another rally, but demand around 1.3150, namely the immediate support cluster, might be insufficient and give in in wake of strong US fundamentals later today. Technical indicators are also giving bearish signals, suggesting that a close in the red zone is more probable. In case the closest support area is pierced, the 1.31 psychological level will be the next target, as it prevented the Pound from diving for more than two weeks now.
Daily chart
Hourly chart
Bulls remain in control
Traders' Sentiment Sentiment is still close to neutral, with 52% of traders now being long the Sterling, compared to 54% on Thursday.
There are slightly more bulls at OANDA - they take up 56% of the positions open with the Canada-based broker (compared to 57% on Thursday). Sentiment at Saxo Bank remains somewhat neutral, as here the number of bears exceeds the number of bulls by only 6 percentage points.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.32 in three months
More than half of traders (60%) believe the British currency is to cost 1.32 or less dollars after a three-month period. The two most popular price intervals were selected by 20% of the voters each, namely the 1.24-1.26 and 1.28-1.30 ones, while the second most popular choice implies that the Sterling is to cost between 1.30 and 1.32 dollars in three months, chosen by 11% of the surveyed. At the same time, the mean forecast for Oct 29 is 1.3173.