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Pound hits the two-dollar mark
Last updated at 11:37am on 17.04.07
Shoppers go to town in New York City
The pound hit the two US dollars mark for the first time since September 1992 today.
The prospect of higher interest rates in UK, following today's stronger than expected inflation figures, caused the spike.
Sterling, which has strengthened in the face of weaker growth expectations in the U.S., was last at the two dollars level just before it was ejected from the European Exchange Rate Mechanism in 1992.
The rise in the value of the pound will again magnify the price gap between goods on sale on either side of the Atlantic.
Electronic goods, clothes and cosmetics have all been historically cheaper in the States and their prices will now fall for British consumers.
But the rise in the pound is less likely to be welcomed by British exporters who will see the prices of their goods rise for foreign buyers.
The British Retail Consortium said eager shoppers should be cautious before booking a return trip.
Travellers are allowed to bring back only £145 of goods, including gifts, without paying tax.
They are hit by import duty and VAT at 17.5 per cent on everything over this amount.
A spokesman said: "By the time you factor in all the other costs, such as hotels and air fares, and given the discounting on the UK high-street, it is not likely that it is going to make economical sense to fly to America for the sole purpose of shopping."
Reader views (3)
Get ready for the super weak dollar. If you think 2 quid to the buck is bad, wait until it's 3! It's only a matter of time.
- Bob, Japan
With the US property market having slumped some 15% and the fact that the pound is almost $2.00, it must be a great time for us heavily taxed people to emigrate to the US now.
I for one will certainly buying that 4 bed detached villa in Orlando soon!
- Raminder Bhalla, Northolt
This seems to happen every year as it gets closer to summer. Unfortunately, some of us cannot go over to the UK in the off season when prices are lower and the pound is cheaper. It is good for people in the UK as they can come over here, visit the attractions and spend some of their money. I take one vacation a year, go to the UK, visit relatives and friends, then come back broke. I know as they say, "what goes around, comes around". Years ago when I first visited England the dollar was strong and would buy a lot. Maybe it will get back to that some time in the future.
- Jim, Tampa, FL USA
