The euro climbed on Tuesday after data confirmed the eurozone economy returned to growth in the second quarter.
The single currency climbed 0.1% to $1.1874 against the dollar, gained 0.2% to Y130.57 versus the yen and was up 0.2% to £0.8594 on the pound.
Data showing that the eurozone economy grew by 2.2% quarter-on-quarter in the April-June period underpinned gains for the euro, as the data confirmed that the region had returned to growth following a contraction of 1.2% in the first quarter.
The second-quarter growth rate – revised up from the initial estimate of 2% – beat forecasts of a 2% rise, as heightened consumer spending following months of lockdown drove the recovery.
During the quarter, household consumption jumped by 3.7%, partially reversing a cumulative fall of 5.2% in the previous two quarters. Government spending rose by 1.2% after a 0.5% drop in the January-March period.
‘‘The recovery in consumer spending has further to run, driven mainly by services, and this should ensure another strong GDP print in Q3, probably even a bit stronger than in the second quarter,” said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.
Overall, the second-quarter performance left the eurozone ecomomy just 2.5% below its pre-pandemic level in the fourth quarter of 2019.
‘‘This indicates that a full recovery will come sooner than we, and markets, initially expected. It could be a reality as soon as the third quarter, depending on the performance and certainly by Q4,” Vistesen added.
Employment figures up
The data also included labour market data, and showed the number of people in employment in the eurozone rose 0.7% in the second quarter. In the first quarter employment had decreased by 0.2%. Hours worked increased by 2.7% in the eurozone.
Vistesen said the data would provide the European Central Bank with the conviction that the economic shock from the pandemic is fading.
‘‘We look for the central bank to announce on Thursday a slight slowdown in the pace of its Pandemic Emergency Purchase Programme (PEPP) through the fourth quarter,” he added.