Pound weaker despite UK services sector growth

The pound was weaker Wednesday on declines in equities markets declined and after a downgrade of US equities markets by Credit Suisse (SWX: CSGN; NYSE: CS).

The weakening came despite reports of growth in the UK services sector and better consumer sentiment in the UK in May.

At just past 11:30 a.m. in New York the pound traded at 86.53p to the euro while it took $1.6399 or ¥156.8875 to buy a pound.

The US dollar was stronger after Federal Reserve Chairman Ben Bernanke said that the US government cannot continue to borrow to cover deficits at the rate it is now doing so without hurting the long-term prospects of the US economy, comments which sent investors in search of the perceived safetly of the US currency.

At the same time, the euro was hurt by new data showing that the Eurozone gross domestic product contracted by 2.5 percent in the first quarter, as well as by comments from the finance minister of Finland calling for stress tests for banks in the European Union.

Also hurting the shared currence were reports that European producer prices dropped 4.6 percent in April from the same time last year, a bit more of a decline than had been expected.

In late morning trade in New York, the dollar traded at $1.419 to the euro while the yen was at ¥135.7599 to the euro and traded at ¥95.67 to the dollar.

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