Commenting on the Euro zone’s meagre GDP growth for Q2, Chris Towner, Director at JCRA, said: “Q2 GDP from the EU was confirmed at 0.2%. Meagre growth and half of what was achieved in the first quarter.
“Also, if you dig deeper into the data it is clear that the slowing is coming from the core of the EU with Germany posting a contraction of 0.1% in the second quarter. France on the other hand continues to grow at 0.3% which perhaps points to how sensitive the German manufacturing sector is to the trade tariffs dispute between US and China.
“The Euro weakened marginally as we go into a big week for the EU with the ECB deciding on whether to loosen policy further. Negative rates in the EU have become the norm and the question as we go into next week is how far can they go? A further cut of 10bps to the deposit rate will bring it down to -0.5%. This is expected but will it be enough? Anything more dramatic will send the Euro lower.”