May 31, 2023

The price of EURGBP could see volatility as the pair has European economic data released.

EURGBP – Daily Chart

EURGBP – Daily Chart

EURGBP trades at the 0.8650 level, a strong uptrend support line.

Tomorrow has several economic data points released for the European economy. German employment figures will start the day with a reading of 15k new jobs expected after last month’s 24k.

German inflation is released later in the day, with a drop to 6.5% expected by analysts. French inflation and Italian GDP will also be released on a busy day for the euro. The pound has been gaining versus the euro, with the economy now expected to avoid recession while the German economy struggles.

New figures show that the German economy experienced an unexpected drop during the year’s first quarter, formally putting the country into recession. German gross domestic product (GDP) fell by 0.3% from January to March, data released on Thursday said.

The figures were a blow to Germany’s government, which recently doubled its growth forecast after an easier winter for energy stocks. The government predicted that GDP would grow by 0.4% from a previous prediction of 0.2%. German newspaper Bild said the country’s economy had already “collapsed” by 0.5% in the recent winter quarter.

German economists said high inflation had dampened consumer spending, with prices in April 7.2% higher than a year ago. Tomorrow’s data could help if prices fall to a 6.5% growth rate as expected.

Thomas Gitzel, chief economist at VP Bank, said the second half of the year looked bleak.

‘There will no longer be any compensation for the expected continued weak private consumption and the ailing construction industry,’ he said.

The UK economy will grow faster than Germany this year and avoid a recession, the International Monetary Fund said. The group revised a previous forecast due to more robust household spending, with falling energy prices also helping Britain to grow 0.4% this year.

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