Euro ticks higher against the British Pound after upbeat German economic sentiment

• EUR/GBP extends gains to 0.8555, approaching the weekly top at 0.8560.
• German economic sentiment figures beat expectations in August.
• In the UK, June's employment report has failed to support the Sterling.

The Euro (EUR) nudges higher against the British Pound (GBP) on Tuesday, buoyed by positive German economic sentiment figures while, in the UK, June’s employment report failed to convince investors. The EUR/GBP pair has crawled to session highs at 0.8555, drawing closer to the top of the weekly range, in the 0.8560 area.

Data released by the ZEW Institute on Tuesday revealed that the German Economic Sentiment Index rose to 34.2 in August from 26.3 in July, beating expectations of a more moderate improvement to 30. The report shows brighter economic expectations across all sectors as the German economy continues to benefit from the government’s infrastructure plans. The report also warns that the record low water levels in the Rhine pose a serious threat to economic activity.

Institutional investors’ sentiment about the current economic situation improved to -61.1, its best reading since July last year, from -77.6 in July, also beating expectations of a -68.8 reading.

Likewise, the expectations for the Eurozone economy improved to 31.4 in August, from 23.4 in the previous month, beyond the market consensus of a 25.4 reading.

In the UK, data released earlier on Tuesday revealed that the ILO Unemployment Rate remained at 4.9% in the three months to June, unchanged from the previous month, against expectations of a slight decline to 4.8%. Employment growth slowed down, but the number of claimants fell unexpectedly, which cushioned the negative impact on the Pound. Wage growth ticked up to a 3.5% year-on-year rate after having remained steady at  3.4% over the previous three months.