Investing.com

Investing.com - The pound pulled back from session lows against the dollar on Tuesday, but remained below recent multi-year highs after data showed U.K. economic growth fell slightly short of expectations in the first quarter.



GBP/USD was last trading at 1.6828 after falling to lows of 1.6793 earlier in the trading day. The pair rose to four-and-a-half year peaks of 1.6856 on Monday.



Cable was likely to find support at 1.6760 and resistance at 1.6856.



Sterling initially edged lower after the Office of National Statistics reported that the U.K. economy grew 0.8% in the first quarter, bringing the annual rate of growth to 3.1%, the fastest rate of annual growth since the fourth quarter of 2007.



Market expectations had been for quarterly growth of 0.9% and an annual expansion of 3.2%.



In the previous quarter, gross domestic product grew by 0.7%.



The U.K.’s dominant service sector grew 0.9% during the quarter, the ONS said, while manufacturing output rose 1.3% and construction output grew 0.3%.



Recent upbeat data has fuelled expectations that the Bank of England could raise interest rates in the early part of next year, propelling sterling to multi-year highs against the dollar.



Earlier Tuesday, BoE Governor Mark Carney said the U.K. recovery is starting to “broaden”, but added that the bank still sees plenty of slack in the labor market.



Elsewhere, the pound was higher against the euro, with EUR/GBP down 0.30% to 0.8214.



The drop in the euro came after official data on Tuesday showed that the annual rate of inflation in Germany rose less than forecast this month, fuelling concerns over the low inflation outlook for the euro zone.



The data came as investors were looking ahead to preliminary data on euro zone inflation, due for release on Wednesday.





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