The Eurozone economy continues to show signs of a slump, with growth rates falling sharply to their lowest levels in four years.

GDP figures showed a modest increase of 0.2% between July-September, down from 0.4% in April-June. These figures are a far cry from the data emanating from the Eurozone earlier this year, when the economy looked robust in the face of the UK’s impending Brexit.

Currency Pair% Change in 1 monthDifference on £200,000
GBPEUR1.9%€4,380

However, with problems mounting in a number of key Eurozone economies, is the single currency likely to find itself under pressure as we head towards the end of 2018?

It is somewhat ironic that the Eurozone and indeed the euro have started to show signs of fragility, ever since the European Central Bank (ECB) announced that they would be ending their asset purchasing programme by the end of 2018. This decision was made by the ECB amid a run of strong economic data and bullish growth figures and future forecasts. The Eurozone economy was exceeding almost every expectation, which in turn allowed EUR to make sustainable gains against both GBP and USD.

Fast forward to now and the current malaise is testament to how quickly market conditions can change. Investor confidence in the euro is waning, with concerns surrounding a changing political landscape, most identifiably in Germany, the economic powerhouse of the Eurozone.

Italian growth rate falls to zero

Add to this Italy’s growth rate falling to zero, despite the Italian Government’s plans to revitalise their economy, and it is easier to understand why investors' risk appetite for the single currency has fallen.

With a potential Brexit deal still in the pipeline, investors will also start to focus on how the UK’s impending exit will impact the single bloc, which will surely not be immune to one of its key assets breaking away.

It may be a rocky road ahead for the Eurozone economy and it will have to navigate this period with no external subsidies, once their Quantitate Easing (QE) programme comes to end shortly.

These issues combined may well handicap any aggressive advances for the single currency in the foreseeable future.

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