German IFO Business Climate Index Beats Forecast, Rises to 88.4 in June

German Business Sentiment Strengthens in June – IFO Index at 88.4

Germany’s IFO Business Climate Index climbed to 88.4 in June 2025, up from 87.5 in May and slightly above the market expectation of 88.3, signaling improving sentiment among German firms.

Key IFO Index Highlights:

• Business Climate Index: 88.4 (vs. 88.3 expected; 87.5 previous)
• Current Economic Assessment: 86.2 (vs. 86.5 forecast; 86.1 previous)
• IFO Expectations Index: 90.7 (vs. 90.0 expected; 88.9 previous)

The rise in the Expectations Index reflects greater optimism among German businesses for the next six months. However, the Current Conditions component came in slightly below forecast, showing a mixed view of near-term economic momentum.

EUR/USD Reaction:

Despite the improved sentiment, EUR/USD remains subdued around 1.1600, suggesting markets are cautious and awaiting further drivers, particularly from ECB and Fed commentary.

What This Means:

The modest improvement in German business confidence could support the Euro in the short term, but with economic divergence still in play across the Eurozone, the impact may be limited unless followed by stronger data.

Related Insights:

• EUR/GBP Dips as UK Services Outperform Eurozone
• ECB’s Lagarde Speech: What to Watch Today