The Eurozone has dragged itself out of recession posting its fastest rate of expansion since the first quarter of 2011.
The preliminary GDP data showed that the 17-nation currency bloc grew by 0.3% in the second quarter. The figure beat economist expectations of growth at 0.2%. The return to growth was driven by a rebound in the German economy and the ending of a brief recession in France.
The German statistical office announced that the Eurozone’s biggest economy expanded by an unexpectedly strong 0.7% in the second quarter.
“The German economy has staged an impressive comeback. Today’s GDP numbers mark the end of a long roller coaster ride of the German economy” said ING economist Carsten Brzeski.
France also saw improvement with the second largest Eurozone economy growing by 0.5% in the second quarter. The growth figure ended the mild half a year long recession that had threatened French President Francois Hollande’s position.
Despite the positive data the Euro remained softer against many of its major peers and some economists are already warning that the journey to growth will not last.
“The strong second-quarter performance will be a boost to President Hollande, who can now substantiate his views that the ‘recovery has already arrived,’” said Diego Iscaro of London’s HIS Global Insight. “However, with unemployment standing at a record high, corporate profitability under intense pressure and fiscal policy being tightened further in 2014, we believe that to expect the strong second-quarter performance to be repeated over the coming quarters would be very optimistic.”
Against the US Dollar the Euro edged lower as demand for the US Dollar continued to improve on the back of Tuesday’s positive retail sales data. Economists are predicting that the USA’s economic recovery is close to becoming strong enough for the Federal Reserve to begin tapering its monetary easing programme in September.
Against the Pound the Euro was boosted following the release of official data which showed that the UK unemployment rate remained static at 7.8% and Bank of England minutes showed that policy makers voted unanimously in favour of maintaining interest rates at 0.5% and the asset purchasing programme at £375 billion. The number of people claiming unemployment benefits fell by 29,200 in July, better than expectations for a decline of 15,000.
Euro (EUR) Exchange Rates
As of 11:00 am
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3241<
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8561 <
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4567 <
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6563 <
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.3737<