Thomas

The dollar buys only .53 GBP. You need almost 2 dollars to get 1 GBP. Why is this exchange rate so miserable? Any hope of it getting better?

gnrbernstein

I doubt it. Our economy sucks. The exchange rate has always been bad though. When we went, it took $1.75 to get to a British Pound and that was in 1999 when our economy was booming!

The thing that really hurt was that the inflation rate is the exact same as the exchange rate. For example, a meal at a TGI Friday's type restaurant might cost you $22. In London it's still 22, just in GBP. YIKES! It would help if the meal was more like 15 GBP, then the difference in the exchange rate wouldn't be so hurtful. It's like that with EVERYTHING too.

~gnr~

Alec

Apart from fundamental economical factors (current account deficit etc), one of the main reasons for a strong pound vs US$ is interest-rate differential: As The Fed raised to 1.75%, Bank of England upped it to 4.75%. The gap isn't set to narrow in near term, so an imminent decline in pound looks unlikely.

taggie

Quite complaining! It takes about 2.5 Canadian $ to get one £.....

nytraveler

Keep things in perspective - the first time I went to the UK the pound was about $2.40. And for many years prior to WWII the pound was worth about $5.

Since travel is not an economic driver in this country - there's really very little we can do about it.

Christina

The USD vs GBP is not great right now, but no need to distort things. It's more like .55 which is $1.83, not almost $2. Anyway, if it's any consolation, there hve been lots of other years when it was similar, and it was worse around 1980.

The fact that a currency doesn't trade one-to-one versus another is not meaningful in itself. I know a lot of people don't understand that, but that is not the measure of a good vs. bad exchange rate.

pandaschu

[For example, a meal at a TGI Friday's type restaurant might cost you $22. In London it's still 22, just in GB]

[It's like that with EVERYTHING too.]


That just isn't true. MAYBE at TGI Friday's (wouldn't know) but certainly not everywhere. I my experience, IN LONDON, things cost fewer pounds than the American counterpart would in dollars. And that is London, where things are more expensive than in the rest of the country.

I am not trying to start an argument- I just don't want people who have never been to Great Britian to get the wrong idea.

roomiec

Pandaschu,
I beg to differ with you BIG time.
I just returned from 2 weeks in London and I don't remember ANYTHING that was less expensive than in America.
Train travel, food, clothing...this is the 1st trip in memory that we didn't purchase anything as "souvenirs" of our trip.

pandaschu

I am sorry for the misunderstanding, that is not what I meant. I meant that it often costs fewer pounds to purchase something than a similar product would in dollars. I agree that things are still more expensive in London, but just not as expensive as if something that is 5 dollars in U.S. cost 5 pounds in U.K.

For instance:
A pint of beer in U.K. costs between 2 and 3 pounds at the pub. In the U.S., a pint of beer at a pub averages around $4.

A chicken salad sandwich in the U.K. from a takeaway shop: between 2 and 3 pounds. In U.S., at least 4 dollars.

A 12 oz. Latte from Pret a Manger: 1 pound 40. In America- 2 or 3 dollars.

Finally, and most specifcally, The Big Blue bath ballisic from LUSH in U.K., 2 pounds 15 p. In America, it costs $3.95.

Of course there are tons of exceptions, I just felt like gnrbernstien was giving the wrong idea.

gnrbernstein

>The fact that a currency doesn't trade one-to-one versus another is not meaningful in itself. I know a lot of people don't understand that, but that is not the measure of a good vs. bad exchange rate.

Christina - I assume you were referring to my statement. It was just an observation and had nothing to do with the exchange rate other than it means that London is exactly whatever-the-exchange-rate-is-at-the-time more expensive than the US. Of course, it depends on where you are in the US, but a museum in NY would cost $15. In London the Natural Museum was 15 GBP. Therefore, it was exactly x% more expensive. That's all I was saying.

~gnr~

crefloors

When I was in London in 2002..boy that long ago already, I need another "fix" badly...anyway the pound was 1.40 and I was lovin' it. It was 1.65 in '99 when I was there. Another reason for the weak dollar I heard..and I'm far from being an economist and understanding it all...but the weak dollar attracts foreign investment and of course foreign travelers. We have so much money going out of the country right now that they are hoping that some will come in from other countries. Makes SOME sense to me

Ryan

If you use the Big Mac index from the Economist, which is a light-hearted way to look at real purchasing power, then a Big Mac in London is the equivalent of about $3.37. That's relative to the $2.90 it costs in the US. Using that index, your real "price" increase is about 16%.

Regardless of the exchange rate, London is an expensive city and always has been.

rj007

The exchange rate is irrelevant to me. In 9 trips to Europe the $ has been all over the place, yet I have had 9 great trips. Of course, it would be nicer if the rate was a little more in our favor, but I will never let it stop me from going to Europe. I have reduced my accomodations cost by 45% in London, so actually it is cheaper now than it was 2 years ago.

Anonymous

One thing that has changed in London since gnrbernstein was there in 1999 is that thanks to a change in the tax laws, most museums are now free.

The Natural History Museum in London (which gbr cited) isn't £15 anymore, admission is free. Whereas admission to the American Museum of Natural History in NYC is $12 per adult, with extra fees for special exhibits, planetarium, etc. Admission to the Met is also $12; not sure where the $15 in gnr's post came from.

tropo

For Aussies, we only get 40 english pence for one Australian Dollar. (Last time I visited Britain only got 33 pence, so things are looking up)
But the exchange rate doesn't stop me from visiting, you just get wiser, and look for cheaper accommodation, and other ways of making your money go further. We always book our rental car in Australia (much cheaper than in UK), also stay in B&B's in London, and not expensive Hotels, and when touring, we use the little UK "green" book from Nationwide B&B Service, and only stay in the B&B's where they advertise approx.40 pounds per couple per night.
The Heritage Pass helps in other way, in saving money on entry passes, and no doubt others on this Forum, would have their ways of saving a buck or two.
Even down to the point of visiting in September/October (just outside of the high season...B&B prices do in fact drop), renting a diesel driven motor car, etc.
So when you complain about US dollar conversion rate, spare a thought for the "little" Aussie bleeding dollar.

Sjoerd

Taggie and tropo make the same mistake: it doesn't really matter how many units of *your* currency it takes to buy one unit of another currency. What matters if how expensive a certain country is as compared to what your living standard at home is.
The Japanese need 203 (yes, two hundred and three) units of their currency to buy one GBP, still for someone from Tokyo London is probably relatively cheap.

tomboy

The REAL measure of value is:
How many hours of work does it take it buy it?
If it takes ten minutes of your time as a stock broker to buy a week in London, versus ten months of one's time as an Iraqi camel shepherd, and then the cost goes up 3%, suddenly the shepherd must work ten days longer. You, on the other hand, must somehow work another 18 seconds.
Life's a hoot, and then you die.

taggie

Sjoerd I understand what you are saying regarding the buying power of a currency. But I do not think that trop and I were making a mistake, since in our respective countries prices for goods are quite reasonable. London by comparison is very, very expensive, and the fact that we have to use more of our respective dollars to buy pounds sterling make it even more so.

walkinaround

a few thoughts...

gnrbernstein says:
YIKES! It would help if the meal was more like 15 GBP

helpful for whom? the wording of this statement implies that prices in the UK should be set according to what things "should" cost an american traveller.

Tropo is right...aussies are some of the best and most frequent travellers in the world..and their spending power abroad is among the weakest as compared to people from almost all other first world countries (and has been for a long time, probably always). So good for them for going anyway. Also, in general, the average aussie is much less prosperous, financially than the average american. And the average Aussie does travel internationally whereas the average american does not.

Remember that VAT (sales tax) is included in the price when you buy something (i know you probably all know this but i have a feeling that the prices that stick in your head are including tax in the UK as compared to not including tax in the US. Restaurant and hotel tax in the US can be very high.

No matter how you cut it, UK is an expensive place. Many visitors don't notice this but the UK does have a much lower material standard of living than the US so it's not like the average local is living it up while you are suffering.

Anonymous is correct in that just about all the world class museums in London are completely free. Museum entry is usually a big expense for tourists so this helps bring down the total cost. A couple can easily get $100 worth of museum entry for nothing.

You can also see very good theatre at the barbican and national very cheaply. We pay for this subsidy with our taxes. West End can also be much cheaper than broadway.

gnrbernstein

<b>Anon</b> - I was thinking of the Guggenhiem. Knowing that the museum is free is reason enough to go back. We went and stood in the lobby and discussed the architecture, then left. We couldn't afford the 15 GBP as students. Plus, we were spoiled since all the museums in Washington, DC are free.

<b>Tomboy</b> - Love that comparison.

<b>Ryan</b> - The cheapest place for fast food - Thailand. Even in the airports it's relatively inexpensive (at least compared to American airports)

~gnr~\/