The Euro weakened to a session low against the Pound and US Dollar after economic data showed that the Eurozone’s recovery has faltered as the region’s economy grew at a slower than expected rate.
GDP in the 17-nation currency bloc barely expanded in the third quarter of the year, increasing concerns that the region could slip back into recession as unemployment remains high and inflation weak. Worries were heightened even more after data showed that Germany, the Eurozone’s largest economy, saw its economic expansion slow sharply.
According to the Luxembourg based statistics office GDP in the Eurozone increased by just 0.1% in the third quarter, down from the previous growth rate of 0.3% expansion recorded in the previous quarter. The figure was below the 0.14% increase forecast by economists.
German GDP expanded by 1.3% far weaker than the 2.9% annualised rate recorded in the second quarter of the year. France however was the biggest concern for investors as its GDP contracted by 0.6% to -0.1%.
Italy, the region’s third-largest economy, suffered a ninth straight quarter of contraction, extending its longest stretch of decreasing GDP since the creation of the euro. Spanish GDP rose 0.1 percent.
The disappointing data comes after the European Central Bank cut interest rates to a new record low after inflation slowed dramatically earlier in the month. Unemployment still stands above 12% for the region with little sign of improvement. Youth unemployment is at 24.1%. In Italy the number of people aged under-25 years old and out of work is a staggering 40%.
Despite the faltering economists still expect the region to grow, albeit slowly.
“We are seeing a painfully slow recovery. I wouldn’t expect any positive surprises for next year either. The good news is that the economy will grow, but definitely too slowly to significantly reduce unemployment,” said a senior Euro-area economist.
The Pound was restrained from making further gains after data showed that retail sales in the UK fell more than expected in October.
Euro (EUR) Exchange Rates
As of 11:20 am GMT
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3427
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8391
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4458
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6298
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.4095
The Euro/ Japanese Yen Rate Exchange Rate is currently in the region of: 134.2703
The Euro/Swiss Franc Exchange Rate is currently in the region of: 1.2331
The Pound Sterling/ Euro Exchange Rate is currently in the region of: 1.1914
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7448
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.6915
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.6134
The Canadian Dollar/Euro Exchange Rate is currently in the region of: 0.7095
Swiss Franc/Euro Exchange Rate is currently in the region of: 0.8110