Following a statement from Bank of England (BoE) governor Mark Carney, the pound has risen by a cent against the dollar, bringing it to $1.5586.
Mr Carney was speaking to parliament's Treasury Committee, when he commented it was nearing time for a rise in interest rates.
"The point at which interest rates may begin to rise is moving closer," he said.
"Once rates begin to adjust, we expect for those adjustments to be at a gradual pace and to a limited extent," he added.
For more than six years, UK interest rates have remained at a record low of 0.5 per cent, reports the BBC, and most analysts expect that the Bank will not raise interest rates until some time next year – at the earliest.
According to Mr Carney, the BoE would be able to push rates up due to "consistent growth above trend, a firming in domestic costs, counter-balanced by disinflation imported from abroad." However, he also warned that rates would not increase to those seen before the financial crisis.
He explained that there are many factors that have created a "new normal" in interest rates – and that level is "substantially lower than it was previously".
During the discussion with the Treasury Committee, Mr Carney was also asked about his views on the Greek bailout.
He believes that to get the measures passed will require "Herculean efforts" from everyone involved.
"The scale of structural reforms, the scale of fiscal adjustment, the scale of privatisation that will ultimately be required are significant," he explained, adding that the nature of the agreement and the scale of the challenge "underscore the number of institutional shortcomings that still exist with the European Monetary Union".
Mr Carney also gave a comment regarding the national living wage, which chancellor George Osborne announced in last week's Budget.
He said the rise in the wage was likely to push up overall wages by around 0.3 per cent. He explained that the Bank was looking into the impact of the introduction of a national living wage and that the finding would be included in the quarterly inflation report next month.
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