Promising 2026 expected for Eurozone economy as data improves

Matthew Ryan, CFA Ebury

Germany’s economy finally appears to have turned a corner following two years in the doldrums. Europe’s largest economy expanded by 0.2% in 2025 according to yesterday’s full-year growth figures, snapping a couple of years of outright contraction.

While not exactly stellar, 2026 bodes to be significantly better, with the country’s huge infrastructure spending programme likely to provide a material boost to employment, investment and consumer spending this year - last week’s encouraging factory output figures suggest that we are finally beginning to see this reflected in activity data.

The Euro continues to trade on developments elsewhere, however, with the EUR/USD pair briefly dipping below the 1.16 level on the dollar following yesterday’s strong US jobs figures.

German inflation data won’t rock the boat this morning. Focus next week will be on the January PMI figures and the release of the latest ECB meeting accounts.

Author

Matthew Ryan, CFA

Ebury

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

EUR/USD faces next resistance near 1.1930

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GBP/USD sticks to the bullish tone near 1.3660

GBP/USD maintains its solid performance on Wednesday, hovering around the 1.3660 zone as the Greenback surrenders its post-NFP bounce. Cable, in the meantime, should now shift its attention to key UK data due on Thursday, including preliminary GDP gauges.

Gold holds on to higher ground ahead of the next catalyst

Gold keeps the bid tone well in place on Wednesday, retargeting the $5,100 zone per troy ounce on the back of modest losses in the US Dollar and despite firm US Treasury yields across the curve. Moving forward, the yellow metal’s next test will come from the release of US CPI figures on Friday.