Suppose that the spot exchange rate between the British pound sterling and the U.S. dollar has changed from $1.3828/ at the beginning of Year 0 to $1.3158/ at the end of Year 5. Assume that the annual rate of inflation during the five-year period is 4% in the United Kingdom and 2% in the U.S., respectively. Choose a correct statement:

1. The pound sterling has nominally depreciated but really appreciated.
2. The pound sterling has both nominally and really appreciated.
3. The pound sterling has both nominally and really deppreciated.
4. The pound sterling has neither appreciated nor depreciated really