BNP Paribas projects Eurozone GDP growth to slow to 0.8% in 2026 but expects EUR/USD to rise to 1.20 by Q4 2027.
BNP Paribas strategists forecast Eurozone GDP growth will decelerate to 0.8% in 2026 from 1.5% in 2025, citing Middle East conflict spillovers and weaker consumption. Inflation is expected to rebound to 2.7% in 2026, up from 2.1% in 2025, driven by energy shocks.
The bank anticipates one additional 25-basis-point ECB rate hike in Q3 2026, raising the deposit rate to 2.5%. Despite slower growth, EUR/USD is projected to climb to 1.16 by Q4 2026 and 1.20 by Q4 2027.
The outlook reflects modest ECB tightening amid persistent inflation pressures, offsetting growth concerns.