Investors and analysts are easy over Sunday's German election while concerns over "Euro strength" have also begun to fade.

The ZEW Economic Sentiment is an almalgamation of the sentiments of approximately 350 economists and analysts regarding the economic future of Germany for the next six months.

The index rose seven points to 17.0 for the month, a reading far higher than the 12.3 level forecast by economists, although still below its long term average of 23.0.

“The solid growth figures in the second quarter of 2017 in combination with a steep rise in bank lending and increasing investment activities by both the government and private firms are likely reasons for the financial market experts’ significantly more positive outlook compared to that of last month,” says Achim Wambach, president of the ZEW.

German investors and analysts reported little unease over the looming federal elections, due Sunday, which see incumbent chancellor Angela Merkel attempting to fend off an assault from Brussels veteran Martin Schultz and other challengers. The strengthening of the Euro also faded as a concern for survey participants.

“The ZEW ESI remains below its long-run average and on past form appears to suggest that annual German GDP growth might slow from Q2’s 2.1% to just 1%. But note that the ZEW has consistently understated growth for almost two years,” says Stephen Brown, European economist at Capital Economics.

September’s ZEW Eurozone Economic Sentiment index also saw a pickup, rising to 31.7, from 29.3 in August, although this was below the consensus for an increase to 32.4.

The Euro was broadly firmer on the back of the data which confirms the uptick in Eurozone economic activity remains robust enough for the European Central Bank to consider fading its stimulus programme in coming months.

Expectations for such a move have underpinned the Euro through to 2017 making it one of the best performing global currencies.

The Pound-to-Euro exchange rate slid 0.42% to 1.1256 at the time of this article's most recent update while the Euro-to-Dollar exchange rate edged 0.25% higher to 1.1991.

“Direct surveys of businesses such as the Ifo continue to point to an acceleration in growth,” adds Brown. “Indeed, as our forecast for German GDP growth of 2.3% in 2017 would mark the strongest election year since 1994, it is little surprise that Angela Merkel seems set to win a fourth term.”

Expectations ahead of Sunday’s election see Angela Merkel’s Christian Democrat Party securing a fourth term, although with the lowest share of the vote since 1998.

However, the incumbent’s vote share has been eaten away as opinion polls show Martin Schultz’s Social Democrat Party wading into the centre ground.

This is while the AfD, which has staunchly opposed the German government’s approach to the migration crisis, has garnered votes on the right.

Tuesday’s ZEW data and Sunday’s German election come in the shadow of the European Central Bank, which is expected to announce the beginning of the end for its quantitative easing program in October.

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