EU GDP Growth Stokes Cautious Optimism Further

Preliminary estimates by the Eurostat have indicated that the European Unions economy expanded by a record 12.6% over Q3 2020. This was only slightly lower than the 12.7% consensus and further stoked the cautious air of optimism following recent Covid-19 vaccine breakthroughs.

It follows the UK’s rebound from recession yesterday, as it posted a strong 15.5% growth over the previous quarter. However, monthly growth predictions over September were missed and subsequently moved GBP away from 2-month highs seen earlier in the week.

GBP/EUR remains above €1.11, GBP/USD above $1.31 and EUR/USD above 1.18, with traders looking for an end of week close-out above these technical levels which would suggest a new trading range for the currency pairs.

The latest readings also show both the EU and the UK are still operating well below their pre-coronavirus output levels, whilst rising unemployment and the impact of further lockdowns remain a concern.

However, bank chiefs are now pinning hopes of widespread vaccinations enabling a full economic recovery. President of the European Central Bank, Christine Lagarde, commented that the recent developments by Pfitzer could “remove significant uncertainty” whilst bank of England Governor Andrew Bailey said the vaccine advance is ‘very encouraging’ for the UK economy.