The euro may be set for a period of recovery, following a surprise turnaround in the Eurozone economy. Eurozone Gross Domestic Product (GDP) figures indicated the Eurozone economy had accelerated to 0.4% during the first quarter of 2019, reversing the sharp slowdown witnessed during the second half of last year.
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Further data confirmed that Italy has emerged from recession, with solid quarter on quarter growth of 0.2%. Their net exports were particularly impressive and helped pull the Italian economy forward, despite many analysts predicting Italy would remain in recession for many months to come.
The good news did not end there however, as France’s Gross Domestic Product (GDP) figure expanded by a healthy 0.3%, while Spain’s quarter-on-quarter growth was better than the markets had predicted at 0.7%.
Whilst German GDP data is yet to be released, early indicators suggest that these figures will also surpass expectation.
EUR sellers are unlikely to have envisaged such a positive set of data considering how negative recent market perception of the Eurozone economy has been.
The EUR received an immediate boost following the release of these figures, with EURUSD interbank rates spiking above 1.12.
Interestingly, it did seem to react as favourably against the pound, although it may yet realign itself following yesterday’s losses.
Whilst it is impossible to know whether this sudden upturn in growth the start of an on-going trend is, it is certainly positive for EUR sellers in terms of their longer-term economic outlook.
These figures will likely bring with them renewed hope but also a stark realisation that no trend is definitive and the currency markets continue to have an innate ability to decisive.
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