Euro Holds Gains as Eurozone Inflation Expectations Soar

The Euro (EUR) has maintained its gains against the US Dollar (USD), holding above 1.1500 and on track for a 1.3% weekly rally, its best performance in nearly four months.

This comes after the Eurozone's GDP data beat expectations on Thursday, with preliminary figures showing a 0.4% growth in the second quarter and a 1% year-on-year rise, beating market consensus of 0.2% and 0.5% increases respectively.

The upcoming release of July's inflation figures will be crucial in determining the European Central Bank's (ECB) decision to hike interest rates in September. Analysts expect the Harmonized Index of Consumer Prices (HICP) to have ticked up to a 2.9% year-on-year rate, while core inflation is seen growing at a steady 2.8% YoY pace.

Inflationary pressures are increasing in Germany and France, with preliminary consumer price index figures showing yearly inflation accelerating to 2.4% in July from 2% in June in France, and rising to 2.8% year-on-year in Germany.