© Dukascopy Bank SA
-Commerzbank
After a rather poor reading of the German ZEW Economic Sentiment last month, caused by the upcoming EU referendum in the UK, the latest data came out rather strong at 19.2, up from 6.4 in May. With the investor sentiment being back on track financial market experts now have more confidence in the strength of the German economy. However, the EU referendum in the UK remains a great deal and a challenge. With all the ‘Brexit' turmoil, such as strong reading is definitely a positive surprise. In case of the ‘Brexit' Germany's economic growth would experience a severe setback, as the British country remains an important trading partner for Germany. As a result, the next GDP data figures could worsen dramatically, also meaning rising concerns for the Eurozone overall.
In the meantime, ECB's president Mario Draghi stated on Tuesday, that the ECB is ready for such an undesired event, as a ‘Brexit'. He said that the European central bank is ready to take measures in order to stabilise the market turbulence should UK citizens decide to leave the EU. Moreover, Mario Draghi stated that the EU's economic recovery is expected to continue at a moderate rate, but at a steady one. However, he did note that there currently are issues concerning the inflation growth, but growth could have been significantly lower if not for the ECB's actions.