Following a strong rally, Sterling fell slightly against its peers. This was caused by the latest General Election polls showing that the Conservatives’ lead has narrowed significantly since the election was called. Given that a larger conservative majority was the rationale for a stronger currency, the weakening of their lead has reversed some of that benefit. While it is likely that the Conservatives will still manage to win, the strength of their majority is less certain, potentially decreasing their advantage in the upcoming Brexit negotiations.

Government borrowing was at its highest level for April in three years, according to the latest figures from the Office for National Statistics (ONS). Public sector net borrowing, excluding public sector banks, was £10.4bn last month, higher than in April 2016. Total public sector net debt was £1.72tn, equivalent to 86% of GDP, an increase of £114bn on April 2016. However, the ONS lowered its expectation for the total year borrowing figure to £48.7bn. Improved growth over 2016 has contributed significantly to the improvement in government finances, as tax revenues have increased. Any slowdown in growth from this point will have a similar negative impact on borrowing levels, making it more difficult for the Chancellor to justify any extra spending.

In Europe, Greece has failed to secure a deal to unlock the next instalment of its multi-billion-dollar bailout after talks with Eurozone finance ministers broke down. Without the new cash, Greece is highly likely to default on a debt payment in due in July. Greece’s economy is continuing to struggle. The country saw its GDP fall by 0.1% in the first three-quarters of the year after a 1.2% fall in the final quarter of 2016. A shrinking economy and growing debt burden is increasing the possibility for a debt write-off of some description. While the Greek crisis has clearly not gone away, the likelihood of contagion that was feared previously is less of a concern. The majority of other troubled Eurozone countries have seen their economies return to strong growth and are paying down high debt levels. However, there is always the potential for volatility from further delays to these debt talks.

This week will see the release of US non-farm payroll figures and unemployment rate on Friday and German inflation and unemployment data on Monday and Tuesday respectively.