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Given the information: Interest rate in US (Rh): Interest rate in UK (RA): The current spot rate for GBP (SRO: 1-year forward rate for GBP
Given the information: Interest rate in US (Rh): Interest rate in UK (RA): The current spot rate for GBP (SRO: 1-year forward rate for GBP (FR): 6% 4% $1.50 $1.52 Trading based on covered interest arbitrage will cause Upward pressure on Rh. Downward pressure on the GBP's FR. Downward pressure on Rf. Downward pressure on the GBP's SR
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