NEWS

Pound To Dollar Exchange Rate Could See Extra £1 Billion From American Tourists

But UK holidaymakers are still screwed.

03/11/2016 09:18 | Updated 03 November 2016

The plunging pound in the wake of the EU referendum is bad news for UK citizens if you’re thinking of holidaying abroad anytime soon - but there may be a plus side.

The closing gap between the value of sterling and the US dollar could see a surge in American tourists keen to take advantage of their increased spending power.

According to research by Travelzoo, a third of those planning on taking a trip next year are considering Britain as their destination.

Caiaimage/Sam Edwards via Getty Images
Tourists in London, possibly American.

The extra dollars this would bring could provide a significant boost to the UK economy.

Dr Yeganeh Morakabati, Associate Professor at Bournemouth University, said: “American visitors spent over £3 billion in the UK in 2015, even with a less favourable exchange rate between the dollar and GBP. 

“A 35% increase in American tourist arrivals to the UK, would mean at least an extra £1 billion spending; this brings American visitor spending in the UK to more than a staggering £4 billion.”

As well as the monetary benefits this could also translate into an additional 20,000 jobs created in the tourism industry.

The pound is also struggling against the Euro meaning outbound tourism from the UK is likely to fall in the coming months.

A High Court ruling due this morning on the Government’s right to invoke Article 50 by royal prerogative is likely to have an immediate effect on exchange rates.

A similar ruling at the Belfast High Court last month saw the pound plunge further as the news broke.

One area boosted by the falling value of Sterling is manufacturing which remained “on a firm footing” last month but caused costs to rise at their fastest pace for nearly 25 years.

HSBC has predicted the pound will hit parity against the Euro by the end of the year meaning a 1:1 exchange rate, bad news for holidaymakers but a boost for exports.

Theresa May has she will start Brexit “no later than the end of March”.

She told delegates at the Tory conference earlier this month that she plans to curb immigration, “stoking speculation the nation is headed toward a so-called hard Brexit - with limited access to the EU’s single market”, Bloomberg reported.

Against the dollar, the forecast is also gloomy with HSBC predicting a fall to $1.10

The PM’s lurch to a “hard Brexit” stance on EU withdrawal risks destroying Britain’s hopes of remaining an open economy, the head of the CBI has warned.

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