okay my main problem is I have to work out a $3$ month interest rate for the us dollar. The question I'm stuck on is At the end of trading on $1$ January $2012$ the dollar/pound spot exchange rate was $\$ 1.5700$ per pound and the three month forward rate was $\$1.5825$ per pound. answer the following:
estimate the us interest rate for the next quarter if the interest rate on risk free pound deposits in the uk for the next quarter is $0.125\%$ ($90$ day rate).
my solution given by the lecturer just says
F = S (1+r)/(1+r£) where $F$ is the forward rate, $S$ is the spot exchange rate and $r$ stands for the interest rate $$1.5825 = 1.5700 (1+r)/1.00125$$ (re arranging from this line is where i become confused ) $r= 0.9222\%$
any help would be appreciated, cheers :)