Euro: Strong GDP supports September ECB hike – BBH

FXStreetJul 30, 2026 11:32 AM

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Brown Brothers Harriman’s (BBH) Elias Haddad reports EUR/USD is consolidating after a rally driven by stronger-than-expected Eurozone Q2 GDP at 0.4% quarter-on-quarter. The recovery in Eurozone activity and above-target inflation reinforce expectations for a European Central Bank (ECB) rate hike in September, though Haddad notes existing market pricing limits Euro (EUR) upside.

Eurozone data backs ECB tightening

"EUR/USD is consolidating yesterday’s rally. Eurozone Q2 real GDP growth was double expectations at 0.4% q/q vs. 0.0% in Q1 with gains broad-based across the major economies."

"The ECB projects real GDP growth to average 0.8% in 2026 with risk skewed to the downside as renewed disruption of energy supplies would weigh on real incomes, spending, and investment."

"Bottom line, the recovery in Eurozone economic activity and above target inflation reinforces the case for the ECB to resume raising rates in September."

"That’s unlikely to offer EUR much upside traction as the swaps curve already implies nearly 90% odds of a 25bps rate hike at the September 10 meeting."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

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