The diagram shows the supply and demand for pounds sterling (£) in the foreign exchange market with the initial US dollar ($) price of the £ being $O{P_1}$.
What will increase the $ price of the £ to $O{P_2}$?
a large capital inflow into the UK
2 )
a large deficit on the UK current account
3 )
a reduction in interest rates in the UK
4 )
a speculative sale of £s in the foreign exchange market
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