1 Given Jim’s expectations, forecast whether the pound will appreciate or depreciate against the euro over time.

Because the Sports Exports Company (an Irish firm)
receives payments in British pounds every month and converts those pounds into euros, it needs to closely monitor the value of the British pound in the future.
Jim Logan, owner of the Sports Exports Company, expects that inflation will rise substantially in the United Kingdom, while inflation in Ireland will remain low. He also expects that the interest rates in both countries will rise by about the same amount.