Period GBP/USD CPI US CPI UK 1985 1.2974 107.6 111.1 1986 1.4677 109.6 114.9 198
ID: 1167777 • Letter: P
Question
Period GBP/USD CPI US CPI UK 1985 1.2974 107.6 111.1 1986 1.4677 109.6 114.9 1987 1.6398 113.6 119.7 1988 1.7813 118.3 125.6 1989 1.6382 124 135.4 1990 1.7841 130.7 148.2 1991 1.7674 136.2 156.9 1992 1.7663 140.3 162.7 1993 1.5016 144.5 165.3 1994 1.5319 148.2 169.3 1995 1.5785 152.4 175.2 1996 1.5607 156.9 179.4 1997 1.6376 160.5 185.1 1998 1.6573 163 191.4 1999 1.6172 166.6 194.3 2000 1.5156 172.2 200.1 2001 1.4396 177.1 203.6 2002 1.5025 179.9 207 2003 1.6347 184 213 2004 1.833 188.9 219.4 2005 1.8204 195.3 225.6 2006 1.8434 201.6 232.8 2007 2.002 207.3 242.7 Period GBP/USD CPI US CPI UK 1985 1.2974 107.6 111.1 1986 1.4677 109.6 114.9 1987 1.6398 113.6 119.7 1988 1.7813 118.3 125.6 1989 1.6382 124 135.4 1990 1.7841 130.7 148.2 1991 1.7674 136.2 156.9 1992 1.7663 140.3 162.7 1993 1.5016 144.5 165.3 1994 1.5319 148.2 169.3 1995 1.5785 152.4 175.2 1996 1.5607 156.9 179.4 1997 1.6376 160.5 185.1 1998 1.6573 163 191.4 1999 1.6172 166.6 194.3 2000 1.5156 172.2 200.1 2001 1.4396 177.1 203.6 2002 1.5025 179.9 207 2003 1.6347 184 213 2004 1.833 188.9 219.4 2005 1.8204 195.3 225.6 2006 1.8434 201.6 232.8 2007 2.002 207.3 242.7Explanation / Answer
The correlation coefficient is negative for RPR and Exchange rate. But for 1/RPR and Exchange rate the relation becomes positive.
Period GBP/USD CPI US CPI UK RPR (CPI(US)/CPI(UK)) 1/RPR Correlation Exchange rate & RPR Correlation Exchange rate & 1/RPR 1985 1.2974 107.6 111.1 0.968 1.033 -0.384 0.383 1986 1.4677 109.6 114.9 0.954 1.048 1987 1.6398 113.6 119.7 0.949 1.054 1988 1.7813 118.3 125.6 0.942 1.062 1989 1.6382 124.0 135.4 0.916 1.092 1990 1.7841 130.7 148.2 0.882 1.134 1991 1.7674 136.2 156.9 0.868 1.152 1992 1.7663 140.3 162.7 0.862 1.160 1993 1.5016 144.5 165.3 0.874 1.144 1994 1.5319 148.2 169.3 0.875 1.142 1995 1.5785 152.4 175.2 0.870 1.150 1996 1.5607 156.9 179.4 0.875 1.143 1997 1.6376 160.5 185.1 0.867 1.153 1998 1.6573 163.0 191.4 0.852 1.174 1999 1.6172 166.6 194.3 0.857 1.166 2000 1.5156 172.2 200.1 0.861 1.162 2001 1.4396 177.1 203.6 0.870 1.150 2002 1.5025 179.9 207.0 0.869 1.151 2003 1.6347 184.0 213.0 0.864 1.158 2004 1.833 188.9 219.4 0.861 1.161 2005 1.8204 195.3 225.6 0.866 1.155 2006 1.8434 201.6 232.8 0.866 1.155 2007 2.002 207.3 242.7 0.854 1.171