Suppose that U

US 1 Year Interest Rate = 8%

UK 1 Year Interest Rate = 6%

Current Exchange Rate = $1.58 / GBP

a)

As per Uncovered Interest Parity Theory (UIP), the difference in the interest rates of 2 countires would be exactly offset by the relative change in both the currencies over the same period. SImply put, it states that if in a country interest rates are higher (High Yielding Currencies) than other (Lower Yielding Currencies), then one can't just get higher rates by investing in other currency. This was because of the depreciation of the high yielding currency over the same period which will offset the excess returns earned by investor by investing in higher yielding currencies. Thus, higher yielding currencies are expected to depreciate as compared to lower yielding currenies as per the UIP theory.

Now, here,

1 Year US interest Rate (8%) > 1 Year UK Interest rate (6%)

Thus, we can say that US is a high yielding currency while UK is a low yielding currency. Thus, as per UIP, USD is expected to depreciate as compared to GBP over the 1 year period.

b)

As per UIP,

Expected Exchange Rate = Spot Rate * (1 + USD Interest Rate) / (1 + GBP interest Rate)

Expected Exchange Rate = 1.58 * (1 + 8%) / (1 + 6%)

Expected Exchange Rate = $1.6098 / GBP

Thus, as per UIP, the expected exchange rate in 1 year is $1.6098 / GBP.