The myth of the strong British pound
Americans will find visiting the U.K. very expensive -- but not Europeans

Steve Goldstein
Market Watch
Friday, November 16, 2007

LONDON (MarketWatch) -- Ed Yardeni, the prominent U.S. economist, made a trip to Britain recently and was startled by the prices he saw.
"Here in London, my sense is that prices are about the same as in New York City, if the exchange rate were one-to-one," he told clients. "At two-to-one, everything really does seem twice as expensive."

In fact, sterling has traded as high as $2.11 this month, before coming off somewhat to the $2.04 level.

Fewer Americans are visiting England, British Airways (UK:BAY: news, chart, profile) has reported, while for U.K. tourists going on shopping sprees state-side, cable has rarely carried as much weight.

That's led many to consider the pound as strong.

Against other currencies, however, the U.K. currency has rarely been so weak.

The pound is exchanging hands at around 1.40 euros, its worst level in more than four years and close to all-time lows.
Australians with IT jobs in London find their earnings translate into the fewest dollars back in Sydney in a decade, with one pound fetching just under A$2.30.

Canadians have been pouring over the southern border to snap up cheap American goods, but if they visit England, they'll be able to make their most castle visits per loonie spent since 1994.

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