Assuming that you know the current US Dollar (USD) and the British pound (GBP) interest...
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Finance
Assuming that you know the current US Dollar (USD) and the British pound (GBP) interest rates for all maturities and you have reliable forecast for US and UK inflation rates. You also know that the market is efficient and market participants are risk neutral. Which theory(s) on the exchange rates/interest rates/ spot fx/forward fx, can be used to forecast the USD/GBP exchange rate movement? Discuss. . Write a total of about 1500 words.
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