The European Commission yesterday released updated economic forecasts for the Eurozone economy. Back in Spring, it forecast euro area GDP growth of 1.7% in 2017 and 1.8% in 2018. These numbers have now been revised up to 2.2% and 2.1% with next year now seeing the economy growing at its fastest pace in a decade.
European Commissioner Pierre Moscovici said, “We have entered a new phase of the economic recovery, with stronger growth driven by resilient consumption, the global upswing, loose financing conditions and falling unemployment”. Though still very high, unemployment in the euro area is expected to average 9.1% this year, its lowest level since 2009, dropping to 8.5% in 2018 and 7.9% in 2019.
With the US Dollar under pressure and few attractive alternatives elsewhere, the euro was indeed the best performing currency on Thursday; holding on to a big figure of EUR/USD1.16 throughout the day and pressuring the pound from an opening level of GBP/EUR1.1325 all the way down to a low of 1.1268.
Today looks set to be much quieter (unless you’re really interested in Slovakian industrial production) and the EUR opens in London at USD1.1647 and GBP/EUR1.1290. We’d expect EUR/USD to stay on a USD1.16 big figure throughout the day but gains to be capped around 1.1670.