10.08.202610:31 Forex Analysis & Reviews: Eurozone growth forecast upgraded to 0.8%: economy weathers war better than expected

According to the latest survey of economists, the eurozone growth forecast for 2026 has been revised up to 0.8% from 0.5%. The revision largely reflects stronger-than-expected Q2 results, when eurozone GDP rose 0.4%, twice the forecast.

Notably, respondents left the near-term growth profile unchanged, expecting 0.2% in Q3 followed by a gradual acceleration. In other words, the higher annual forecast reflects the recognition that actual outcomes have already been better than expected, not a change in future outlook.

The bloc's resilience looks particularly striking given the challenges it faced: a recent rally in energy prices, cost cuts, and job losses at European automakers, and wildfires. Sentiment has improved lately on renewed efforts to end the Middle East conflict and to reopen the Strait of Hormuz, with additional optimism coming from Germany's efforts to revive its own growth.

Germany, Europe's largest economy, received a separate upward revision. A separate survey shows German growth of 0.8% this year versus the 0.6% forecast a month earlier, also explained by the unexpected strength of Q2. Growth is expected to accelerate to about 1.2% by 2028, aided by a boom in defense spending.

Nevertheless, firms across the continent remain cautious about risks, some of them quite tangible.

All this should support the euro against the US dollar, especially after a sharp shift in expectations about ECB and Fed actions.

Technical picture for EUR/USD

Buyers now need to think about taking the 1.1567 level. Only that would allow targeting a test of 1.1592. From there, a push to 1.1620 is possible, but doing so without support from large players will be difficult. On a decline, I expect serious buying only around 1.1541. If no one appears there, it would be better to wait for a new low at 1.1520 or to open long positions from 1.1502.

Technical picture for GBP/USD

Pound buyers need to take the nearest resistance at 1.3505. Only then can they target 1.3540, above which further gains will be difficult. The furthest upside target is around 1.3585. On the downside, bears will try to seize control at 1.3468. If they succeed, a break of that range would deal a serious blow to bulls and push GBP/USD toward 1.3435 with the prospect of extending to 1.3417.