Eurozone Growth Resilient Despite Headwinds

Rabobank's Senior FX Strategist Jane Foley notes that the Eurozone Q2 Gross Domestic Product (GDP) and Purchasing Managers' Index (PMI) data came in stronger than expected, with a growth rate of 0.4% q/q compared to a median expectation of 0.2% q/q.

This resilience is surprising given the challenges posed by higher energy prices and supply disruptions, particularly the near-closure of the Strait of Hormuz.

However, Foley warns that the breakdown of the US-Iran agreement poses downside growth risks, while expectations of further European Central Bank (ECB) tightening and competition from China could limit Euro strength.