Assume That U

Multiple Choice

Assume that U.S. interest rates are 6 percent, while British interest rates are 7 percent. If the international Fisher effect holds and is used to determine the future spot rate, the forecast would reflect an expectation of:

A) appreciation of the pound's value over the next year.
B) depreciation of the pound's value over the next year.
C) no change in the pound's value over the next year.
D) There is not enough information to answer this question.