LONDON (Reuters) — Britain's goods trade gap with the rest of the world narrowed unexpectedly in May to its smallest since October 2005, official data showed yesterday, although April's deficit was revised sharply higher.Sterling rose to session highs against the dollar, moving back towards 26-year peaks scaled last week, as the figures suggested Britain's exporters are coping well with the strength of the pound.

The Office for National Statistics said Britain's goods trade gap narrowed to $6.291 billion ($12.68bn) in May from an upwardly revised $6.933bn in April. Economists had forecast a deficit of $6.6bn.

The goods trade gap with non-EU countries also narrowed unexpectedly to $3.481bn from $3.856bn, its smallest since June 2006. Analysts had predicted a deficit of $4.0bn.

"Export values have shown a healthy jump on the month," said Philip Shaw, chief economist at Investec. "But April's numbers were revised unfavourably and in the broad scheme of things that should dampen the enthusiasm for May's better out-turn."

The ONS said there had been significant downward revisions to April's export data to the European Union because of estimates for late returns were not as reliable as previously. April's global goods trade gap was originally estimated at $6.316bn.

In May, total exports of goods rose by 3.5 percent to $18.2bn while total imports of goods fell slightly to $24.5bn, the ONS said.

Economists say trade data can be distorted by fraud and are often heavily revised, making them an unreliable indicator of what is happening in the economy.