GBP/USD lower after upbeat U.K. data, remains supported

The pound edged lower against the U.S. dollar on Friday, after the release of upbeat U.K. data, as investors locked in profits following sterling's recent rally to nearly five-year highs on growing expectations for a rate hike by the Bank of England before other central banks.

Cable was likely to find support at 1.6853, the low of May 5 and resistance at 1.6969, the high of May 6 and an almost five-year high.GBP/USD hit 1.6910 during European morning trade, the pair's lowest since May 6; the pair subsequently consolidated at 1.6916, easing 0.09%.

Official data showed that U.K. manufacturing production rose 0.5% in March, beating expectations for a 0.3% gain, after a 1.0% increase the previous month.

A separate report showed that the U.K trade deficit narrowed to £8.48 billion in March, from £8.75 billion in February, whose figure was revised from a previously estimated deficit of £9.09 billion.

Analysts had expected the trade deficit to widen to £9.00 billion in March.

The data added to a recent string of strong economic reports indicating that the recovery is deepening, fuelling further expectations for a U.K. rate hike in the early part of next year.

Sterling was steady against the euro, with EUR/GBP inching 0.06% lower to 0.8169.

Sentiment on the single currency remained vulnerable after European Central Bank President Mario Draghi said the central bank governing council is comfortable with acting at its next meeting, after the bank has published fresh forecasts for inflation and growth.

Earlier Friday, official data showed that Germany's trade surplus narrowed to €14.8 billion in March from €15.8 billion in February, whose figure was revised from a previously estimated surplus of €15.7 billion.

Analysts had expected the trade surplus to widen to €16.6 billion in March.