A spotlight has been kept on Europe in recent weeks, as France held presidential elections and the UK started early discussions with Brussels on its departure from the European Union. Both the euro and the UK pound appreciated during this period, reflecting a pull back from negative sentiment and a revival in risk appetite. Emmanuel Macron, the centrist candidate, was widely tipped to become the next President of France after topping the first round ballot on April 23. His win in the run off on May 7 has provided relief to investors fearful about the future of the EU. Some support for the UK pound stems from the decision by UK Prime Minister Theresa May to call a snap election for June 8. Opinion polls suggest that the Conservatives will secure a large majority, which would provide her with a more stable political platform as she negotiates Brexit. Yet significant uncertainties surround UK and European economic policy, which could lead to periodic bouts of FX volatility. Most other major currencies retreated last month even though the US dollar has been weighed down by weak data. These include the yen, partly due to concerns about the ability of the Bank of Japan to reflate its economy. In addition, tensions in the Korean peninsula have deepened fears about security in Asia and beyond. In China, a solid Q1 GDP outturn and stability in the renminbi allowed Beijing to loosen some capital controls. A gradual decline in the currency, though, is expected, partly because of concerns about an over reliance on state investment to drive the Chinese economy.