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If you’re looking for other non-FOMC forex market events to trade this week, you might wanna consider the U.K. jobs release on December 16 at 10:30 am GMT. Here’s a quick trading guide for this report:

What is this report all about?

The U.K. employment report has two main components: the claimant count change and the unemployment rate.

The former shows the number of blokes who claimed unemployment-related benefits during the reporting month so a lower figure is generally good for the economy.

The latter measures the percentage of the labor force that is unemployed and actively looking for work, with a declining trend indicative of an improving labor situation.

As discussed in our School of Pipsology lesson on Fundamental Analysis, rising employment usually spurs stronger consumer spending and business activity, which then boosts overall economic growth and the local currency’s value.

On the other hand, falling employment could weigh on consumer confidence and spending, dragging down growth prospects and currency demand.

Forex traders also pay close attention to the average earnings index, which is the three-month rolling average of wage changes.

After all, higher pay also tends to support spending activity, along with inflationary pressures.

How did the previous reports turn out?

The past three months have been quite dreary for the U.K. labor market, as the claimant count change has been coming in weaker than expected and indicating an increase in joblessness.

For the month of October, the number of claimants rose by 3.3K, more than twice as much as the projected 1.6K increase.

uk claimant count change

Interestingly enough, the unemployment rate has chalked up three consecutive monthly declines, falling from 5.6% in June to its seven-year low of 5.3% in September.

Meanwhile, the average earnings index has been hovering around the 3.0% level, barely reflecting any wage gains lately.

uk unemployment rate

What’s expected this time?

For the month of November, the claimant count change is projected to show a 0.9K increase, which would mark a bit of an improvement from the readings in the past few months.

The unemployment rate is expected to stay at 5.3% for October while the average earnings index might slip from 3.0% to 2.5% for the three-month period ending in October.

How might GBP/USD react?

Pound forex pairs haven’t been faring so well ever since the BOE shifted to a less hawkish stance, admitting that it may take them much longer to hike rates than initially anticipated.

With that, downbeat economic reports tend to carry more weight, as these underscore the U.K. central bank’s more cautious bias.

Still, stronger than expected results could allow the British pound to advance against its forex rivals, especially if the claimant count comes in negative or the unemployment rate dips lower again.

Keep in mind that, in the previous release, GBP/USD was able to keep rallying thanks to the drop in the jobless rate, even if the claimant count missed expectations.

GBP/USD 15-min Forex Chart
GBP/USD 15-min Forex Chart