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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.

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