The German economy has been in the headlines recently after showing signs of an economic slowdown, which would be a negative euro outcome due to Germany being the Eurozone’s largest economy.
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However, it was confirmed yesterday that the stalling economy has returned to growth after first quarter Gross Domestic Product (GDP) figure rose by 0.4%, which means that the economy is growing at an annual rate of just 0.7%.
Despite these figures being expected by the markets, the euro still spiked in value as this result will take some of the pressure off of the European Central Bank. There has been calls for new economic stimulus after the German economy narrowly avoided falling into recession in the last quarter of 2018.
Any further positive signs from the likes of the German and French economies could encourage the euro to move higher, so do feel free to register your interest if you wish to be kept updated regarding the heath of the Eurozone economies.
Another upside for the Eurozone moving forward is the delay the US’s plans to implement trade tariffs on European made cars into the US. There are expectations for US President Trump to announce a 6-month delay to the tariff’s, which could boost the euro in the meantime.
One of the potential downsides for the euro are next week’s European elections due to the potential for political disruptions. The Italian budget concerns are raising their head once again, with Italian Deputy Prime Minister Matteo Salvini stating on Wednesday that the EU’s budget rules are ‘starving the continent’ and must be changed. This comment came a day after he said that Italy should be ready to break the EU’s rules.
Aside from next week’s election results there could be movement this morning as Eurozone inflation data will be released at 10.00 this morning with expectations of 1.7% annually expecting to be announced.
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