It's based on the pricing of the forward points, using interest rate parity. There are some unfortunate complications to these basic methods nowadays, but the basis for pricing of FX forwards is always IRP (which in itself is a particular case of a "no-arbitrage" logic) You can perform this basic calculation, assuming all else equal, but you need to do some arithmetic. If you want to do it yourself, you need to get your hands dirty in Excel. The basic pricing methodology is always the more or less the same, no matter what the underlying does (with some special cases in extremes).
That's all well and good, but nobody has shown any numbers to that effect. What market data are you using to obtain the IRP? The IRP is supposed to represent the rate in theory. I thought I would just use a back calculation between the forward and spot. That's I determined the 1.08%. I guess that works since, I won't know what the IRP will be in 120 days as per my example. no need for excel. Besides, excel is not suitable for doing those calculations without some VBA or else occupying 20 cells.
What numbers do you want specifically? For reasonably short-dated forwards, you can use the STIR futures markets (in your case, Eurodollar and Short Sterling). With some caveats, the two term deposit rates that you can obtain from STIRs can be used in the IRP calculation to obtain the forward exchange rate. That's how things get priced by the dealers in the mkt (again, I am simplifying things a bit). As to "no need for Excel", suit yourself. In my entire career in the mkt, I don't think I've ever heard anyone say that. I applaud you for being different and wish you the best of luck.
When I search through the available financial instruments for "Eurodollar" Excel is such a bottleneck, plus I am using Macs. PCs are even worse, even though it is supposedly multicore capable. I have had it tested. Excel suffers from features bloat, as do all other spreadsheet programs, which is why I had a bloat-free one designed. Considering what I spent on the hardware, I am sure it's not the bottleneck.
Either GE or ED tickers are what you need. For short sterling, it's likely to be FSS or L. Please note that, since these are STIR futures, they represent forward rates. To properly do the IRP calculations, you need spot rates which can be obtained with a little bit of arithmetic (you will also need the 3m LIBOR fixings for both mkts). Again, all of this is needed for you to be able to re-price the FX fwd points. If you don't want to do that, you can just assume the mkt is correct and use mkt mids. I wasn't necessarily suggesting that you need to use Excel. If you have your own spreadsheet tool, by all means, you should use that.
So, I think USD LIBOR is 1.219 and GBP LIBOR is 0.29094. 1.219-0.29094=0.928%. I should use 0.928% instead of 1.08%?
The future price movement seems to mirror the current price movement. That is all I was saying. http://www.cmegroup.com/trading/fx/g10/british-pound.html