The oneyear forward rate of the British pound is 155 while t

The one-year forward rate of the British pound is $1.55, while the current spot rate is $1.60. Based on the forward rate, what is the expected percentage change in the British pound over the next year? O a. +5.0 percent b. -3.1 percent c. +3.1 percent O d. +3.2 percent Oe. none of the above

Solution

b.-3.1%.

change %age = (forward - spot) / spot *100

=> (1.55-1.60) /1.60 *100

=>-3.1%.