Cheapest Time to Travel to the UK in 25 Years

That's right, the last time it was this cheap to travel to the United Kingdom was in 1985, the same year the remains of the Titanic were found off the coast of Newfoundland.

The British pound has fallen 8.7% against the Canadian dollar, which is a 25 year low for the royal currency. But it's not just the UK that's now cheaper: the Canadian dollar has been strengthening against most of the world's major currencies, making travel to the United States, Japan, Europe and Australia more affordable.

The loonie is buying more than 64 British pence at the moment, compared to a low of about 52 pence in July last year. Likewise, you can now get 71 euro cents for each loonie, compared to roughly 59 euro cents this time last year.
Our dollar has also climbed back against the U.S. dollar after famously jumping above parity at the end of 2007. One loonie is worth about 97 U.S. cents, compared to 77 U.S. cents a year ago. Bank of Montreal economists expect the Canadian dollar to continue to strengthen against the greenback and rise above the US$1 mark in the second half of this year. They also expect the Canadian dollar to make further gains against the euro and the pound.

So why is the loonie doing so well? Put simply, the recession in Canada was not as bad as in other parts of the world. The U.S., UK and Europe now carry a significant debt because of their economic recovery programs. In some places, like Britain, sales taxes have begun to rise.

Meanwhile, the Canadian economy is growing, and many have begun to think that the Bank of Canada will soon have to raise interest rates from their record lows in order to prevent consumers going wild in the housing market and pushing house prices too high, because that's what got the U.S. into the whole sub-prime mortgage mess in the first place.

Higher interest rates make the Canadian dollar more attractive to overseas investors, and the stable economy makes it look like one of the safer bets in the market. So while the rest of the world is trying to heal, Canada is already on the mend.

That means it should be a good year to take advantage of the strong loonie and go on that trip to the Continent.