Investing.com - The pound fell to session lows against the dollar on Wednesday after data showing that that U.K. service sector expanded at the slowest rate in five month in May fuelled concerns that the economy is slowing.
GBP/USD was down 0.55% to 1.5259 from around 1.5356 ahead of the data.
The Markit services purchasing managers\' index slowed to 56.5 last month from 59.5 in April. It was its lowest level since December. Economists had expected the index to tick down to 59.2.
Similar surveys showed weakness in the U.K. manufacturing sector and a rebound in the construction sector this month. Taken together the data shows that the U.K. economy only grew at a quarterly rate of 0.4% in May, Markit said.
Sterling was also lower against the euro, with EUR/GBP up 0.18% to 0.7280.
In the euro zone, data on Wednesday showed that retail sales rebounded 0.7% in April and were up 2.2% from a year earlier.
Another report showed that the region’s unemployment rate fell to 11.1% in April from 11.2% in March.
Demand for the single currency continued to be underpinned by hopes that Greece will soon reach an agreement with its international lenders on a cash-for-reforms deal.
On Tuesday, Greece\'s creditors drafted an agreement to present to Athens in a bid to make a breakthrough in protracted negotiations and release financial aid before the country runs out of money.
Greece is due to make a €305 million payment to the International Monetary Fund on Friday but has warned that it will be unable to make the repayment if a deal is not reached by then.
The euro slid lower against the dollar, ahead of the European Central Bank\'s latest policy announcement later in the day, with EUR/USD down 0.34% to 1.1114.
The dollar remained on the defensive after data on Tuesday showing that U.S. factory orders unexpectedly fell in April sparked fears the growth could struggle to pick up in the current quarter after a weak first quarter.