Higher sterling rate.

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British tourists heading to Mallorca have found an unusual ally in the pound sterling which reached a two-year-high against the euro this week. What is more London currency traders expect the upward trend to continue against the single currency which will make a Mallorca holiday cheaper.

This is good news for the island which has been tagged as being "too expensive" by some British tourists. The increasing costs of a Mallorca holiday have hit the bar and restaurant trade hard with takings down by as much as 20 percent as tourists keep to their holiday budget.

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The pound hit a record of 1.20 euros this week, its highest level for more than two years. One real estate agent told Bulletin Online "when the pound is strong Mallorca benefits." Higher sterling could also give the local real estate industry a lift and will also mean that British pensioners, who receive their pension from Britain, will have a few more pennies to spend.

There is rising concern on the island about the spending power of tourists. While a record number of tourists came to the island last summer there spending power was limited. Bar and restaurant owners blamed higher holiday costs.

British tourists are usually the highest spending holidaymakers who come to the island. Over the coming weeks they will have a bit more extra cash.

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