GBP weakened against most of its major counterparts in the European session on Friday after the data revealed an unexpected drop in the UK’s retail sales for May.

The Office for National Statistics (ONS) reported that the UK's retail sales declined 1.4% m/m in May, following a 9.2% m/m surge in April, when retail restrictions were eased. This was the first monthly drop in retail sales since January. Economists had forecast a 1.6% m/m gain. Lower retail sales at food stores (-5.7% m/m) were the largest contribution to the monthly decline in May, as the easing of hospitality restrictions had had an impact on sales as people returned to eating and drinking at locations such as restaurants and bars. On a yearly basis, the retail sales rose by 24.6% last month, following a 42.4% jump in April and also missing economists' expectations of a 29.0% climb.

Market participants also received the Bank of England's (BoE) quarterly survey of public attitudes to inflation, which showed that median expectations of the rate of inflation over the coming year were 2.4% in May, down from 2.7% in February 2021. Expectations of inflation in the longer term also fell - to 2.7% in May from 2.9% in February 2021.

Investors’ focus is now shifting towards BoE’s policy meeting, which is due on June 24. Markets do not expect any changes to the Bank’s policy settings.