Pound strengthens against dollar

The pound has strengthened against the dollar, after Bank of England minutes revealed that policymakers considered boosting money supplies.

The prospect of the move, which could encourage lending - stimulating the economy - boosted sterling.

By Wednesday afternoon, one pound could buy $1.5514, up from Tuesday's close of $1.5350. A day earlier, sterling had reached a five-month high of $1.5525.

The dollar was also weaker against both the euro and the yen.

At noon, the euro was trading at 88.16p.

Meanwhile, the yen was hit by the announcement that the Japanese economy had shrunk by more than 4% in the first quarter of 2009.

With analysts seeing indications of economic recovery, there are signs that investors are moving away from the greenback, often deemed a safe haven.

In January, the pound hit a 23-year low of $1.35 against the dollar.

Last July, the pound was worth more than $2 but its value plunged as signs emerged over the degree of the downturn in the UK.

The May minutes also showed members had unanimously voted in favour of keeping interest rate unchanged at 0.5%.

The Bank of England's minutes showed the bank was open to increasing its quantitative easing plan by the maximum £75bn permitted, which would help encourage lending.