Shoppers look to US as two-dollar pound nears

Shoppers look to US as two-dollar pound nears
· Christmas bookings for transatlantic flights surge
· Travellers target New York and Caribbean beaches

Katie Allen
London Guardian
Monday, November 27, 2006

It is one of the magic numbers of the financial world and a phenomenon that grabs the attention of mobile British shoppers - the two-dollar pound.
This week, with experts predicting that the value of the dollar will continue to sink, the magic $2 to a pound is tantalisingly close. And, with demand for transatlantic flights surging and Christmas on the minds of consumers, it represents perfect timing for a cross-Atlantic shopping frenzy.

Virgin Atlantic reports that bookings to New York are up a fifth on a year ago, while reservations for Christmas holidays to Miami and the Caribbean are also flooding in. The airline will announce today it is raising Caribbean capacity by 20% to cope with mounting demand.
"Brits will always look for a bargain and if the bargain is in New York on the back of better exchange rates then they will take it," said Virgin's Paul Charles. He even suggested that many travellers were celebrating their cheaper holidays by booking seats in first-class and business.

One of the most popular items on the dollar-denominated shopping is the iPod. The new video version costs around £190 this side of the pond while in the United States they can be snapped up for the equivalent of £128. One transatlantic shopper, Laura Collett, a 27-year-old accountant from the Midlands, said a recent trip to New York was also easier on the mental maths than usual.

"It was good because you could just basically halve the price to get sterling," she said. Jumpers from Abercrombie, a necklace from Tiffany's and make-up from Bloomingdales department store all came in at a pleasantly lower price. "Nice surprise when the credit card statement came through," she said.

The pound's rise has less to do with strength over here than with the weakness of the dollar. The US currency came close to a two-year low against the pound and tumbled against other currencies last week on the back of a gloomy outlook for the world's largest economy. Traders expect softer inflation and slower spending could usher in interest rates cuts within months. All of which could mean that the dollar soon breaches $2 to a pound for the first time since 1992.

Price watch

iPod Video 30gb £189 on UK high street, $249 (£128) in US

Men's Levi's 501s £65 in UK, $35 (£18) in US pre-Christmas sales

PlayStation2 £99.95 in UK, $130 (£67) in US

Tiffany's Lucida platinum wedding band £485 in UK, $700 (£362) in US

Calvin Klein Perfectly Fit T-shirt bra £27 in UK, $36 (£18.60) in US

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