EU GDP Revised Lower, Confirming Stagnant Growth

EU GDP and Euro Analysis

  • EU GDP growth rate unchanged compared to Q2 (-0.1%) and stagnant vs Q3 2022 (0%)
  • EUR/USD heads lower as the euro struggles to halt declines across G7 currencies
  • German CPI and US non-farm payroll data to end the week on Friday

Growth turned negative in Q3 when compared to Q2, highlighting the worsening trajectory of the European economy. However, the year-on-year comparison managed to avoid a contraction but did get revised lower from an anaemic 0.1% gain to end flat at 0%.


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Stagnant Growth Sets in for Europe

The chart below depicts the state of affairs in Europe as the global growth slowdown really takes hold. Europe has witnessed fast declines in the manufacturing sector – led by massive declines from Europe’s manufacturing giant, Germany – and woeful sentiment regarding economic prospects which have only started to pick up again.

Markets now price in a greater likelihood that the ECB will be forced to cut interest rates by a larger amount next year, something that has weighed heavily in the euro in the last two weeks. Inflation in Europe is showing great progress, so much so that PPI is currently negative (deflationary), and typically lags traditional measures of inflation like CPI by around 6 months.

EU GDP Growth Percentage (Year-on-year)

Source: Refinitiv, prepared by Richard Snow

Immediate Market Reaction

The immediate reaction in EUR/USD saw prices head lower but only after building up ahead of the data release.

EUR/USD 5-minute chart

Source: TradingView, prepared by Richard Snow

The daily chart shows a continuation of the bearish directional move which has crossed below the 200 SMA and now tests the 38.2% Fibonacci retracement of the late 2022 decline. The pair may find temporary support ahead of German inflation data and NFP tomorrow. Softer German inflation could see even further euro softening ahead of NFP

EUR/USD Daily Chart

Source: TradingView, prepared by Richard Snow

— Written by Richard Snow for

Contact and follow Richard on Twitter: @RichardSnowFX