GBP/USD: Trading the British Nationwide HPI

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The British Nationwide HPI (Housing Price Index) measures the change in the selling price of residential homes.  As a house is likely to be the largest purchase that a consumer will make, this indicator provides important data about the mood of consumers and the health of the economy. A reading which is higher than the market forecast is bullish for the pound.

Here are all the details, and 5 possible outcomes for GBP/USD.

Published on Friday at 7:00 GMT.

Indicator Background

The Housing Price Index measures inflation in the housing sector. As an important housing indicator, it provides analysts and traders with a snapshot of housing market conditions as well as consumer spending activity.

The previous reading came in at 0.4%, surprising the markets, which had predicted a much lower reading of -0.1%. The forecast for December is set at 0.3%. Will the index again beat the market prediction?

Sentiments and levels

Economic indicators in the UK, such as consumer confidence, retail sales and property prices are all pointing sharply downwards, and the economy is likely headed for a recession in 2012. The outlook is much brighter in the US, and this has been reflected in recent gains by the US dollar against most major currencies. So, the overall sentiment is bullish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.5815, 1.5780, 1.57, 1.5580, 1.5475, 1.5340, 1.5270 and 1.5120.

5 Scenarios

  1. Within expectations: 0.1% to 0.5%: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 0.6% to 0.9%: An unexpected higher reading can send the pair well above one resistance line.
  3. Well above expectations: Above 0.9%: The likelihood of such a high reading is very low. This outcome would prop up the GBP, and a second resistance line might be broken as a result.
  4. Below expectations: -0.3% to 0%: A reading in negative territory or at zero could push the pair below one level of support.
  5. Well below expectations: Below -0.3%: Such a scenario would push GBP/USD downwards, possibly breaking two or more support levels.

For more about the British pound, see the GBP/USD forecast.

Get the 5 most predictable currency pairs

About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.

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