House prices have risen 1.1% in June from May and 11.1% from June 2006, figures larger than the 0.6% monthly increase, and the 10.3% yearly increment expected by the analysts.
June’s increase has been the largest in the whole 2007 year, which gives yet another reason to the Bank of England to raise interest rates to 6% in the coming months. The yearly increase has been the largest since January 2005.
According to the Nationwide Building Society, house prices increased in June to GBP184,070 average price from GBP181,584 in May. In the last twelve months, the average3 price of a house increased GBP18,000.

The following technical analysis gives us a detailed lookout on what is expected to happen to the pair.

The buying point of GBP/USD is at 2.0010; triggered by the breaking of the Fibonacci fan first line and failure to make lower bottom then the previous support of 1.9988. The market is in up trend towards 2.0063

- Previous resistance is the take profit at 2.0063
- Fibonacci retracement at 23.6% represents the stop loss at 1.9988

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the crossing of the two moving averages below the zero line, the shorter term moving average is faster than the long term and is pointing upwards with break of zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI, we can determine that it is a bullish market and it is on an uptrend.

The zero line of the ROC (Rate of Change) is very important to understand the strength of the market and as we see on the graph; it breaks the zero line and moves upwards. We should always look at the trend line; and in this example it is a clear uptrend. For the momentum oscillator we have to concentrate at the zero line and the trend of the oscillator. Most of the indicators show us the strength of the Sterling against the US dollar and the continuation of an up trend.


* The following analysis is for information only; Finotec is not responsible for any
decisions or misinterpretations based on the given text.

By Finotec’s professional analyst,
Tony B.

dealingdesk@finotec.com