Sinking U.K. Currency Lures Canadian Travellers

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CALGARY — Travel companies say more Canadians are looking at vacations in the United Kingdom because of the dropping British pound in the wake of the country's decision to leave the European Union.

Melisse Hinkle of Cheapflights.ca says the travel website experienced a 50 per cent spike in searches for flights from Canada to the U.K. on the weekend after the June 23 vote and interest has been strong since.

"Savvy travellers have realized that, while the long-term impact of the Brexit means big changes for travel to and within Europe, there is an immediate opportunity for more affordable travel,'' she said in an email.

Hinkle attributed the spike in interest to the drop in the pound's value against the loonie, making everything from London flights to West End theatre tickets cheaper for Canadians.

brexit pound
A woman watching the Brexit vote in The Churchill Tavern, a British-themed pub, reacts as a graph shows the British Pound falling in value following the announcement that Britain would leave the European Union, in the Manhattan borough of New York, U.S., June 23, 2016. (Photo: Andrew Kelly/Reuters)

Cheapflights.ca said in a blog post that average airfares on flights to London from Canada in August were already cheaper by about 11 per cent compared with last August. That's consistent with a recent report from Montreal-based tour operator Transat AT, which said added service to London by Air Canada and WestJet Airlines had forced it to lower its prices to sell seats.

The blog warned that Britain may be more crowded this summer, pointing out that searches for flights from the U.S. to the U.K. doubled in the days after the vote while those from China jumped 61 per cent and searches from EU countries went up more than 30 per cent. It said U.K. citizens are also more likely to vacation close to home.

Pound fell to 30-year low

The British pound rapidly fell to three-decade lows after the referendum, though it has since regained some ground.

Senior economist Royce Mendes of CIBC says he expects the pound to drop to C$1.70 over the next three months due to political uncertainty and predicted interest rate cuts from the Bank of England before reversing course and rising near the end of the year.

Before the Brexit vote, CIBC had forecast the pound's value would rise to C$2.02 by Sept. 30.

"We're looking at Q3 (the third quarter) to be the strongest point and after that the Canadian dollar will start to depreciate against sterling,'' he said.

Spokeswoman Allison Wallace of Flight Centre Travel Group agreed that interest in U.K. is up but said bookings aren't likely to follow.

"This is largely due to the fact that we're already into high season for travelling to Europe so availability is low, keeping prices high,'' she said in an email. "If we see an effect, it will be much more significant going into next summer.''

WestJet's new flights to London's Gatwick Airport began in May and have been very popular, said spokeswoman Lauren Stewart. She said it's too early to say whether demand for the flights has increased.

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