d) Factors influencing floating exchange rates

• what are Floating exchange rates determined by?

  the ​interaction of demand and supply​ and affected by changes in demand and supply.
• an increase in supply of pounds to S1 causes a decrease in the value of the pound

  increase in supply may be due to increase in imports to the UK and increased selling of the pound

  
• a decrease in the demand for pounds to D1 causes a decrease in the value of the pound to P1

  decrease in demand may be due to decrease in exports from the UK and decreased buying of the pound