You are a financial analyst tasked with evaluating whether covered interest parity $($CIP$)$ holds for one$-$year government bonds issued by the U$.$S$.$ and British governments. Identify the key data points you would need to conduct this analysis and explain why each is essential for testing CIP. Develop a step$-$by$-$step methodology for empirically testing whether CIP holds, considering exchange rate dynamics, interest rate differentials, and arbitrage opportunities. Analyze potential real$-$world deviations from CIP, discussing factors such as market frictions, capital controls, and transaction costs. Using historical or hypothetical data, interpret possible outcomes of your analysis. Under what conditions would CIP be violated, and what are the economic implications of such a violation? Support your response with relevant financial theories and examples from global markets.