Question: Using purchasing power parity to explain exchange rates if the current spot FX rate for the EUR/GBP = 0.8783 and if inflation in the Euro

Using purchasing power parity to explain exchange rates if the current spot FX rate for the EUR/GBP = 0.8783 and if inflation in the Euro zone is expected to be 2% over the next quarter and inflation in the UK is expected to be 0.5% for the same period, to what level is the spot EUR/GBP exchange rate expected to move over the quarter?

	A.	EUR/GBP 0.8654
	B.	EUR/GBP 0.2196
	C.	EUR/GBP 0.8914
	D.	EUR/GBP 0.8544

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