Mubasher: The European Central Bank (ECB) on Thursday said it expected that global economic growth to continue despite weakening trade momentum, in line with analysts’ forecasts.

The bank also noted that uncertainties pertaining to global factors “remained prominent” mainly due to talks of trade wars and ongoing trade tensions, which could “generate a more general decline in confidence throughout the global economy, beyond any direct effects from the imposition of tariffs.”

The ECB expressed concern for emerging market (EM) economies and their currencies which have suffered strong depreciation lately, but did not go into detail.

It did note that the euro had traded “in a very narrow range” against the US dollar, while in nominal effective terms, the euro had gained traction against several developing and emerging market currencies.

“Part of the depreciation of these economies’ currencies was likely related to the growing uncertainty over the impact of trade tensions,” the ECB said.

The Turkish lira retreated by as much as 40% against the US dollar lately amid spat between Turkish President Recep Tayyip Erdogan and US President Donald Trump.

As for the Euro area’s activity, which witnessed a slowdown in quarterly real gross domestic product (GDO) in the first three months of 2017 to 0.4%, the ECB said this weakening “had by and large reflected a pull-back from the very high levels of growth recorded in 2017, with activity still exceeding the rate of growth of potential output.”

The Frankfurt-based ECB forecast that the medium-term outlook was “consistent with solid and broad-based economic growth.”

This expectation was noted despite recent data showing that real GDP growth in Q2-18 had been “somewhat slower than embedded in the June Eurosystem staff projections,” the bank added.

By 12:12 pm GMT, the EUR/USD shed 0.16% to $1.1578.