Britian's trade gap narrowed in January even as it industrial output fell the most in more than six months thanks to problems in North Sea oil production.

Manufacturing output in January fell 1.5 percent from December, the Office for National Statistics said Tuesday in a statement published on its website. Industrial output, which includes energy and mining activity, fell 1.2 percent, the ONS said, in part because of a North Sea oilfield shutdown.

"The manufacturing figures are appalling. They represent a very poor start to 2013 for the factory sector. This may be a snow story once again, but one should be wary about putting too much of the blame onto weather conditions," Philip Shaw, a UK economist with Investec told Reuters. "Our view is that the UK will probably avoid a triple-dip recession but these figures hardly inspire confidence in that view."

Britain's totoal trade deficit, however, unexpecedtly narrowed to £2.362bn from £2.811bn in December. The goods trade deficit narrowed to £8.195bn from £8.738bn, the ONS said in a separate statement. The goods trade deficit to the Eurozone, Britain's biggest export partner, narrowed to £3.28bn in January from £4.169bn in December. Oil imports fell 23 percent to £3.817bn, the ONS said, the steepest decline in five years. The drop hived the country's "oil deficit" to around £434m

Sterling fell to a two and a half year low of $1.4855 against the US dollar following the data relase and traded at 87.57 against the European single currency.