Investing.com - The pound trimmed losses against the U.S. dollar on Tuesday, but remained under pressure after Bank of England Governor Mark Carney indicated earlier in the trading session that there is leeway for the bank to leave rates on hold for longer.
GBP/USD pulled away from 1.6597, the pair's lowest since February 24, to hit 1.6639 during U.S. morning trade, still down 0.03%.
Cable was likely to find support at 1.6555, the low of January 23 and resistance at 1.6742, Monday's high.
During testimony to parliament’s Treasury Select Committee on Tuesday, Carney said the amount of spare capacity in the economy was probably slightly higher than 1.5% of gross domestic product, indicating that the economic recovery can continue without pushing up inflation.
He added that there was a range of views among the bank’s monetary policy committee members on the amount of spare capacity in the economy.
Carney also reiterated that when rate increases do come they will be gradual.
Earlier Tuesday, data showed that U.K. manufacturing output rose more than expected in January, but bad weather hampered the broader measure of industrial output.
Manufacturing production rose 0.4% in January, the Office for National Statistics reported, above expectations for a 0.3% gain, while December’s figure was revised up to a 0.4% increase from a previously reported gain of 0.3%.
On a year-over-year basis, manufacturing production rose 3.3%, up from 1.4% in December.
Industrial output rose 0.1% in January, slowing sharply after a 0.5% increase in December and was up 2.9% from a year earlier. Analysts had expected industrial output to rise 0.2% in January.
Sterling was steady against the euro, with EUR/GBP inching up 0.01% to 0.8337.
Also Tuesday, European Central Bank Vice President Vitor Constancio said the bank made its forward guidance on the existence of slack in the euro zone economy more precise at last week’s meeting, but this was not picked up by markets.
He also said the central bank still had policy options available, including lower interest rates or quantitative easing, if necessary.