Will the Eurozone enter a recession?

Eurozone data has been quite concerning in the last 6 months prompting many to question the future direction on the single currency. GDP, Gross Domestic Product, has been a worry and this week we will have the latest new from on GDP data for Q4 2018 released on Thursday. Clients holding Euros to purchase another currency might find further weakness ahead if the economy is as expected coming in at 0.2% for the final quarter.

This would actually put the Eurozone on for slower growth than the UK and also the United States. This expectation is why the Euro has been losing ground in the recent weeks and might well suffer further in the future. A big worry over the Eurozone economy has been that the ECB, European Central Bank were too hasty in their assessments in December where they looked to withdraw the QE, Quantitative Easing program.

The outlook for the region is now slightly worse, this was underlined by the IMF, International Monetary Fund, who downgraded the economic growth forecasts for the Eurozone , in particular Germany and Italy. With political concerns mounting across the bloc too, investors might well need to be much more mindful of the outlook for the Euro.

Expectations for the Euro will also be shaped by two key events this week, firstly the parliamentary vote on Brexit which will take place in the coming days. We must also be mindful of the US Federal Reserve interest rate decision which will take place on Wednesday. Both events will likely move the currency markets and could well trigger volatility on the Euro.

The expectation for the Euro is potential weakness, the market sentiment has definitely changed in the last few weeks. With Brexit plans continuing and the US Government shutdown paused, there are still many global events to move the currency markets.

If you have a position to buy or sell the Euro and wish to get the latest news on the market, please feel free to get in touch for the latest new and information.

Thank you for reading and I look forward to hearing from you.

Jonathan Watson

jmw@currencies.co.uk