Sterling investors largely took in stride the recent comments from the Chief Economist of the Bank of England. Andy Haldane is warning consumers and investors of the possibility that wage-price spirals as a result of inflationary cost pressures are a potential outcome that British companies could soon be facing. He blames the threat on the economic recovery in the wake of the pandemic. He believes that, as happened in the 70s and 80s, price pressures will become embedded in employees' pay packets, which could lead to greater demands for higher pay. Haldane, a member of the BoE's Monetary Policy Committee, was the sole vote for reducing the central bank's bond-buying program. Other MPC members believe that any increase in inflation will be transitory, at best. The BoE's inflation forecast are likely to exceed the 2% target, perhaps rising to 2.7% or even 2.8% by year's end.

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In London trading as of 11:55 am, the GBP/USD was lower at $1.418, down 0.1612%; the pair has ranged from a low of $1.41727 to a high of $1.42156 in today's session. The EUR/GBP was higher at 0.8592 Pence, a gain of 0.0944%, off the session peak of 0.85981 pence (FXB, UUP).

Market's Focus on Data

With a quiet day on the economic calendar as May draws to a close, markets will focus on data coming out of the US. Data on personal consumption expenditures for the month of April is due out today, with analysts calling for a rise in core expenditures price index to 0.6% from 0.4% on a month-over-month basis and a rise to 2.9% from 1.8% on a year-over-year basis. Looking ahead to Monday, a holiday in the US, the focus will be on PMI data for May out of China. The latest poll of economists suggests a decline in the Non-manufacturing sector PMI which should fall to 52.7 from 54.9 for May, and the NBS Manufacturing PMI should show a small increase to 51.4 from 51.1.