Suppose that spot pounds are selling at $1.7342, while 90?day forward pounds are selling at $1.7156. At the same time, DM spot and 90?day forward rates are $0.6138 and $0.6014, respectively. According to these quotes the

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The pound is selling at a forward discount relative to the DM. The forward discount/premium is calculated by comparing the forward rate to the spot rate. The percentage difference for the pound is calculated as [(1.7156 - 1.7342) / 1.7342] * 100, which is approximately -1.07%. For the DM, it is [(0.6014 - 0.6138) / 0.6138] * 100, which is approximately -2.02%. The relative difference between these two gives a forward discount of approximately 3.87% for the pound relative to the DM.

Suppose That Spot Pounds Are Selling at $1