Yesterday, the UK manufacturing report pleasantly surprised us as it beat expectations and eased some nerves regarding the deteriorating UK economic data that we have seen over the last several weeks.

Many people thought that Brexit was catching up, but yesterday´s numbers gave a ray of hope to those who thought so, including me.

Let´s see if construction matches UK manufacturing today

GBP/USD reached 1.3245 after the release, taking advantage and making the most of the recent weak USD. That´s another step forward for GBP, which is climbing step after step towards the big level at 1.35. This level was the low after the massive decline following the 2008 financial crisis.

That´s where we can also find the 100 SMA on the weekly forex chart. But before that, we have to take out the 2000 smooth moving average on the daily forex chart, which at the moment stands around 1.3260.

The release of the UK construction report, which is due shortly, could potentially take us above that moving average. The number is expected to be around 54.3 PMI points, which is lower than the previous reading which also missed expectations.

If this month´s number misses again, then that will extinguish hopes that the UK economy is turning around. It´s almost certain that it would send GBP/USD lower. Though, considering the recent USD troubles, it is advisable to stay clear of GBP/USD and trade EUR/GBP; buy it at spot and trace the stop loss higher.

I´m not sure we will stick to this rule either, but buying EUR/GBP would be safer, considering that the Euro has been performing pretty well recently.   

If the number is positive and above 54.8 (which was last month’s reading), then we would advise buying GBP/USD at spot with a stop below 1.32.