1966 Ford Mustang Inaccurate temp reading

Engine Cooling problem
1966 Ford Mustang V8 Two Wheel Drive Manual

I am finishing up a restoration on a 1966 Mustang GT with a 289 Hi Po engine. Only modifications on engine are Comp Hyd Cam with 260 degrees and.447 lift. Temperature gauge (original) will gradually move until it reaches the Hot level. I have a 160 degree thermostat and water temperature measured with a laser guage indicates water temp at 185-190 degrees. I have installed a new sending unit with correct resistance range but have not changed the constant voltage regulator located bening the guage cluster. What causes the temp guage to show the engine running hot when in fact it is not? Thank you for your help with this problem.