If the inflation rate in Canada is greater than the inflation rate in Britain,other things held constant,what will happen to the British pound?

Question

Quizplus · Accepted Answer

When the inflation rate in Canada is higher than in Britain, the value of the Canadian dollar is expected to decrease relative to the British pound, leading to an appreciation of the British pound against the Canadian dollar. This is because higher inflation typically reduces a currency's purchasing power, making goods and services from the country with higher inflation more expensive compared to those from the country with lower inflation.

If the Inflation Rate in Canada Is Greater Than the Inflation