Never mind GDP - euro edges up as eurozone inflation hits eight-month high

Emma Haslett
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Inflation celebration: CPI strengthened in July (Source: Getty)

The euro rose 0.2 per cent against the dollar to $1.1100 this morning after a slew of figures from the eurozone suggested things are getting better, albeit slowly.

Eurozone inflation rose to the lofty heights of 0.2 per cent in July, its highest since the end of last year, better than analysts' expectations of 0.1 per cent.

That was driven by food, alcohol and tobacco, while rose 1.4 per cent, while services rose 1.2 per cent.

The bloc's GDP growth, which came out at the same time, was slightly less encouraging: the eurozone economy grew 0.3 per cent between the first and second quarters. Although that was exactly what analysts had been expecting, it was down from 0.6 per cent in the first quarter.

Year-on-year growth was 1.6 per cent - again, bang on expectations, although down slightly from 1.7 per cent.

But unemployment provided some better news, holding steady at 10.1 per cent.

"A subtle smile will likely creep across Mario Draghi’s face this morning as an uplift in eurozone [inflation] figures for July gives an element of breathing space which perhaps market participants were not expecting," said Alex Lydall, senior sales trader at Foenix Partners.

"In what is now a post-Brexit era, little has been noted of the impact on the eurozone, rather focus has largely been on the UK, so solid GDP figures this morning and the inflation rise will give hope that the eurozone is (at least) starting this era on an improved status.

"Negative sentiment is rife and global impacts largely unknown at present, but as Draghi recently pointed out, the initial headwinds have been dealt with efficiently, and the rest remains to be unknown. One step at a time, but for now, measurable success is emanating from the eurozone."

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