The current spot rate is 1.22. The one-year forward rate is 1.20. Under no- arbitrage, what is best estimate/ forecast for the spot rate in one year? 

Please find the solution as below

Current spot rate ($/£) = 1.22

One year forward rate = 1.20

There would be no arbitrage only when estimated spot rate is equal to the one year forward rate, therefore estimated spot rate ($/£) would be equal to 1.20