The Euro (EUR) exchange rate was holding ground against the Pound (GBP) and US Dollar (USD) on Friday as Gross Domestic Product data released in the Eurozone came in better than forecast and showed that after six long years of misery Greece finally exited recession, despite that economists were left unimpressed.
Economists had been fretting that the data would show that the 18-member currency bloc was sliding into recession; instead, it showed that all but two Eurozone member nations posted growth or stagnated in the third quarter of 2014.
According to Eurostat, the regions GDP increased by 0.2% from the second quarter when it rose by 0.1%. The figure beat economist forecasts for a rise of 0.1%. Stronger growth from Germany and France countered the negative news from Cyprus and Italy.
Here is how the main European economies fared in the last three months:
Germany: +0.1% quarter-on-quarter
France: + 0.3% q/q
Spain: + 0.5% q/q
Italy: -0.1% q/q (In Recession)
Portugal: +0.2% q/q
The Netherlands: +0.2% q/q
UK: + 0.7% q/q
The Eurozone: +0.2% q/q
The wider European Union: +0.3% q/q
‘The Eurozone economy is still growing, albeit at a snail’s pace, despite all the doom mongering by the IMF and others. A slow recovery rather than a third recession looks to be on the cards. Having said that, this is not an outlook that policymakers could possibly be satisfied with,’ said Nick Kounis, an economist from ABN AMRO.
Further gains for the Euro were muted despite the fairly positive data, as the markets were not that impressed with the figures. Both Italy and Cyprus remain in recession. Such weak economic growth will not aid the Eurozone’s stubbornly high unemployment rate and inflation across the region remains well below the European Central Bank’s target of 2%.
A separate report showed that the Eurozone’s inflation rate remained weak in October. On an annual basis, inflation rose by just 0.4% matching economist forecasts. On a monthly basis inflation stagnated at 0% down from the preceding months rise of 0.4%.
The Pound Sterling meanwhile remained under pressure after data released by the Office for National Statistics showed that construction output rose less than expected in September.
Output increased by just 1.8% below forecasts for a rise of 3.7%. Sentiment on the pound also remained vulnerable after the Bank of England said Wednesday that inflation is likely remain below its 2% target in the near term and fall below 1% at some point during the next six months.
The bank now expects inflation to take three years to return to its 2% target.
Against the US Dollar the Euro remained, softer as sentiment towards the ‘Greenback’ remained supported ahead of the release of US retail sales data and the diverging monetary policy outlook of the Federal Reserve and its major rivals.
Euro Exchange Rate News:
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