Despite stronger than expected retail sales in the month of May, the British pound refused to rally. This may be due to the fact that the price deflator dropped from April, which is an indication of softer inflation pressures.
After the surprise decrease in average wage growth yesterday, the market has become very suspicious of whether the central bank really has the data to back up their hawkish monetary policy stance. A survey released today indicates that the British public expects prices to rise over the next year, but this is simply a reflection of consumer sentiment for prices rather than actual price increases by retailers.