Convert Virtual Key Code to unicode string

That key is a dead key, as you can see if you try it yourself or look at the Keyboard Viewer with the German layout active.

On the Mac, the way to enter a dead key’s actual character, without composing it with another character, is to press a space after it. So try that: Turn off kUCKeyTranslateNoDeadKeysBit, and if UCKeyTranslate sets the dead-key state, translate a space after it.

EDIT (added by asker)

Just for future people, here is the fixed code with the right solution.

TISInputSourceRef currentKeyboard = TISCopyCurrentKeyboardInputSource();
CFDataRef uchr = (CFDataRef)TISGetInputSourceProperty(currentKeyboard, kTISPropertyUnicodeKeyLayoutData);
const UCKeyboardLayout *keyboardLayout = (const UCKeyboardLayout*)CFDataGetBytePtr(uchr);

if(keyboardLayout)
{
    UInt32 deadKeyState = 0;
    UniCharCount maxStringLength = 255;
    UniCharCount actualStringLength = 0;
    UniChar unicodeString[maxStringLength];

    OSStatus status = UCKeyTranslate(keyboardLayout,
                                     keyCode, kUCKeyActionDown, 0,
                                     LMGetKbdType(), 0,
                                     &deadKeyState,
                                     maxStringLength,
                                     &actualStringLength, unicodeString);

    if (actualStringLength == 0 && deadKeyState)
    {
        status = UCKeyTranslate(keyboardLayout,
                                         kVK_Space, kUCKeyActionDown, 0,
                                         LMGetKbdType(), 0,
                                         &deadKeyState,
                                         maxStringLength,
                                         &actualStringLength, unicodeString);   
    }
    if(actualStringLength > 0 && status == noErr)
        return [[NSString stringWithCharacters:unicodeString length:(NSUInteger)actualStringLength] uppercaseString];
}