German Q1 GDP surprised to the upside printing at 0.5% versus 0.1% eyed as it helped ot lift EUR/USD above the 1.2850 level in early morning European trade. In calendar-adjusted terms, economic activity was up 1.2% on the year. In non-adjusted terms, GDP growth came to +1.7% y/y.
The growth in Germany was driven by exports and better than expected consumer spending while investments declined. The news may ease some concerns about Europe’s largest economy falling into a recession, however GDP data is by definition backward looking while the latest flash PMI data from the manufacturing sectors has suggested a sharp slowdown in economic activity.
The EUR/USD rebounded above the 1.2850 level as small waves of short covering kicked in, but focus remains on Athens as politicians there continue to negotiate to form a working coalition government. For the time being the pair appears to have stabilized at these levels as it awaits further developments from Greece.