Analysis: The dollar, sterling and US-UK travel demand

Could demand to the US pick if the pound strengthens post-general election? Ian Taylor reports

UK arrivals to the US reached almost four million for the first time since the pandemic last year, but US visitor numbers to Britain were at a record level boosted by an exchange rate more favourable to American travellers.

Air capacity between the US and UK returned close to 2019 levels in 2023, with almost 950 flights a week offering more than 253,000 seats – on a par with the 257,000 in 2019.


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Nine UK airports offered direct flights to the US, operating to 34 US airports, although Heathrow accounted for 85% of the seats to the US, and British Airways and Virgin Atlantic alone operated more than half (54%).

UK visitor numbers to the US remained down on 2019 last year at just below 3.9 million compared with 4.78 million in the last pre-pandemic year, though up from 3.47 million in 2022.

The explanation for the shortfall compared with 2019 lies primarily with the exchange rate of the pound against the dollar which averaged $1.24. The poor sterling exchange rate exacerbated the impact of price inflation in both markets to make US holidays more expensive.

However, US government data shows UK tourist arrivals to the US were up 5.4% on 2023 in the first five months of this year, an increase that would take numbers back above 4.1 million if maintained to the end of the year.

The sterling-dollar exchange rate goes a long way to explain variations in demand across the Atlantic from year to year.

UK arrivals to the US hit a record 4.9 million in 2015 after several years with the pound valued above $1.53. A previous peak in UK visitors of 4.5 million in 2007 and 4.6 million in 2008 coincided with sterling worth between $1.85 and $2.

Then the global financial crisis hit in 2008-09 and, while the resulting recession took a toll on all international travel, the pound lost almost 20% of its value against the dollar and UK visitor numbers to the US only reached four million again in 2013.

The pound’s value was hit again following the Brexit referendum vote to leave the EU in June 2016, falling to $1.30 and below – a second devaluation of almost 20% – where sterling has stayed since apart from during the pandemic year of 2021 when it moved back above $1.30 for time.

US visitors to the UK and the travel companies serving them have enjoyed the benefit.

Travel from the US to UK is at record levels with more than 5.1 million making the trip in 2023, 14% up on 2019, and spending by US visitors surpassed £6.2 billion – 50% up on 2019 and 24% up allowing for inflation.

The pound has recently strengthened against the dollar, rising from an average $1.24 in 2023 to almost $1.27 in the first months of this year.

Analysts note sterling hit a 21-month high after the announcement of a general election on July 4, suggesting the end to a period of political uncertainty could see the pound strengthen further.

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