Examine the below graph of central bank monetary policy rates. The dashed lines represent forecasts.

Based on this graph and the theory of interest rate parity only, what do you expect to happen to the GBP per CAD cross rate over the next two years? The GBP is the currency in the UK and the CAD is the Canadian currency.

The GBP per CAD exchange rate number is expected to:

Select one:

a. Rise due to the CAD appreciating against the GBP.

b. Rise due to the CAD depreciating against the GBP.

c. Fall due to the CAD appreciating against the GBP.

d. Fall due to the CAD depreciating against the GBP.

e. Remain constant.