Gross Domestic Product figures released out of a number of key Eurozone economies yesterday were mixed, leaving the euro struggling for direction which has been case for some time now.
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Growth in Italy was flat during the 2nd quarter of this year, and although this was better than expected as market commentators had expected to see a contraction of 0.1%, it provides an indication that the Eurozone’s third largest economy is struggling. The slowing economy, along with the political uncertainty that’s hampered Italy over the past year or so now as the coalition government remains at loggerheads with the European Central Bank (ECB) regarding its Budget, could negatively impact the euro in future. This topic may be worth following for those hoping the EURGBP rate climbs even higher, and it’s worth noting that the current rate remains within 1-cent from the best levels of the past year, which were hit on Tuesday.
Overall growth within the Eurozone has halved in the second quarter compared to the first, with the rate of growth at 0.2% in the second quarter.
To add to the slowing economic growth in the region, inflation levels are also struggling and yesterday morning it emerged that Eurozone inflation levels have hit a 17-month low. In July, levels fell to 1.1% which will continue to fuel speculation that incoming ECB President, Christine Lagarde may need to ramp up monetary policy when she begins her new role on November the 1st of this year.
This morning at 10.00am the Eurozone’s Manufacturing PMI data will be released, then tomorrow at the same time Retail Sales figures will also be released. The financial markets may be following these releases closely, especially after the concerns out of Germany recently regarding both of these areas of the economy. If you wish to be updated should there be any market movements, do feel free to register your interest with us here at Foreign Currency Direct.
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