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I have a 7 hour layover in Gatwick and I wanted to explore the city during that time. I have a US passport if that helps.

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With a US passport, you can enter the UK without a visa (for up to 180 days--well more than your 7-hour stay), so that's no problem.

The problem will be that Gatwick is far from the city. Fortunately, the Gatwick Express makes transportation into the city fairly easy, and you can buy a round-trip ticket starting around £31.05. The trip to Victoria Station will take a bit more than half an hour. There are cheaper ways to get from Gatwick to the center of London, but they will take longer. Whether time or money is more valuable to you is a personal preference. From Victoria station, it's another 15 minutes or so, by metro or bus, into the city center.

I would budget a minimum of 1 hour each direction (so 2 hours round-trip) if you're using public transportation, plus about £40 for public transportation (Gatwick Express + tube/bus in the city).

With that, you should arrive back to Gatwick, to clear security and find your gate, about 2 hours before your departure. Leaving the airport will also take a minimum of 30 minutes (to deplane, claim luggage if applicable, etc). So that would leave 2-3 hours in the city to do sight-seeing.

It is, of course, up to you whether £40 for transportation is worth it for this amount of time in the city.

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    A couple of tips - if you get a normal train (i.e. not the Gatwick Express) tickets are much cheaper, like £10-£15 for an off-peak (not rush hour) day return, and they're only a little slower, in fact I think trains to London Bridge might even be the same speed. Ask the guy at the ticket machines for help, because UK rail tickets are confusing. You can also add a day travel card to your ticket for around £4 and get free public transport within London for the day. Also don't forget that London's best museums and art galleries are free – user56reinstatemonica8 Oct 13 '15 at 8:39
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    Another tip: on the cheaper (Southern and Thameslink) services, there is a lot less luggage space than on the Gatwick Express -- and that's not brilliant to start with. If you can leave your luggage at the airport, do that. It also means you don't have it searched at places you visit in London. – Andrew Leach Oct 13 '15 at 10:13
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    @AndrewLeach I think on layovers, the luggage is usually taken direct from plane to plane by the airport staff, isn't it? Unless you bought tickets for the two flights separately. But yes they can be tricky if you have bulky cabin baggage. (also, just remembered, the Gatwick-St Pancras trains are slow but I think all the others are fast - nationalrail.co.uk gives more info) – user56reinstatemonica8 Oct 13 '15 at 10:55
  • I have only transited through the UK once, and that was in LHR en route to MAD, and I didn't have any checked luggage, but if memory serves, I did see some fetching their luggage then immediately re-checking it. But I don't know under which circumstances this may be required. – Flimzy Oct 13 '15 at 10:57
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    "From Victoria station, it's another 15 minutes or so, by metro or bus, into the city center." - It really depends on what you mean by the centre. I would say Victoria station is the centre (it's certainly Zone 1). Well within walking reach of Buckingham Palace, Green Park, etc... – Andrew Ferrier Oct 14 '15 at 5:57
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As flimzy pointed out, it's going to take a while to get through the airport and to and from London. In my opinion, spending about 40 pounds to see a glimpse of london for 2-3 hours really isn't worth it. Remember that the parts you want to see may be quite a way from London Victoria and London Bridge stations. Getting to London bridge is sometimes actually quicker, but it's not a particularly nice part of london. (the bridge everyone wants to see is Tower bridge, not London bridge)

You would be better off going in the other direction, to the coastal city of Brighton. It's about the same time away by train, even though it's much quicker by car. The train ticket is cheaper and everything is within walking distance of the station. It's famous for its (pebbly) beach, Pier and Pavilion, and has a wonderful secondhand market / Bohemian area in North Laine which is as good as any in London (and probably cheaper.)

The official UK railway site is www.nationalrail.co.uk

EDIT

Here's a sample set of times/fares for tomorrow afternoon OFF PEAK for the three destinations from Gatwick mentioned in this answer. Peak services will be more expensive, especially in London.

Victoria 30min / 26.50GBP (Express service) or 31-42min / 15.40GBP (stopping service)
London Bridge 29-74min / 11GBP
Brighton 31-36min / 9.50GBP

I was the only one to mention London Bridge, though I dismissed it in favour of Brighton. As people have pointed out in the comments, the London Bridge area does have some things to offer, but I still think Brighton is the best choice. If you travel regularly, London's opportunity will come soon, and hopefully you will have time to do it justice.

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    Tower Bridge is the next bridge downstream from London Bridge, it's less than a mile away. There's plenty else to see within a mile of London Bridge station, including the Tower of London (en route to Tower Bridge) and St Paul's Cathedral (in the opposite direction). – djr Oct 13 '15 at 13:24
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    +1 for the Brighton suggestion. As for London Bridge, the area itself is awful but it's great for views of Tower Bridge, great for transport links, and in addition to what djr says you're also walking distance from (towards Tower Bridge) HMS Belfast (WW2 warship turned floating museum) and (other direction opposite St Paul's) the Tate Modern (UK's top modern art gallery, free entry) – user56reinstatemonica8 Oct 13 '15 at 13:52
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    And there is also the Shard, where you could go to actually see the city from above and get a quick glimpse of what you are missing (for £26 more pounds) – SztupY Oct 14 '15 at 13:52
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    Assuming the OP has traveled from the US, then I would say £40 for 2-3 hours in a major European city that you wouldn't otherwise see, is a bargain. The OP has probably easily already committed to spending £1500+ on the trip. The real issue is the amount of hassle and/or risk of not making it back in time. – JBentley Oct 14 '15 at 15:15
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    London Bridge has a number of things which make it worth a visit; Borough Market on a saturday, one of London's smallest pubs as well as many regular sized ones, the Shard, the river Thames with views of various landmarks... I can think of worse places to spend a couple of hours. – bye Oct 14 '15 at 16:10
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Yes, US citizens are welcome to enter the UK without advance notice.

When you arrive at Gatwick, simply follow the signs for "Arrivals" / "Passport control" / "Baggage claim" / "Exit".

Do not follow the purple signs for Flight Connections. Once you enter the departure area after security, it is not easy to leave again.

Your luggage (if you have any) will be checked through automatically (unless you are advised otherwise at check in), you will not be able to collect it. When you return to Gatwick, you may need to visit a check in counter to collect your onward boarding pass, if you were not issued it at your outbound station.

There is no problem doing this, it is not unusual. If you have checked-in luggage, you may wish to present your baggage receipt to ensure it gets linked to the new check in record.

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OK, the other answers have addressed the visa issue - which is fine - I'm going to add a warning and a suggestion.

The warning first: it's not likely, but if there were some critical incident or failure on the public transport system then you might be unable to get back to Gatwick in time. Travel time from central London to Gatwick by car is over an hour without traffic - if the rail system were having problems then this could easily lengthen to 2 hours due to knock-on congestion. It's not likely to happen, and depending on the flexibility of your ticket it might not matter, but something to bear in mind.

Now the suggestion: get the train from Gatwick to Waterloo changing at Clapham Junction. This takes about 50 minutes: http://ojp.nationalrail.co.uk/service/timesandfares/GTW/WAT/tomorrow/1430/dep
The advantage is that Waterloo station is right next to the London Eye, which is just about the best way to see a big chunk of London sights in one go. Pre-book your ticket as the queues can be a problem. You get a great view of Parliament and Westminster Abbey in one direction and in the other direction a view across to the City (the financial centre) and Docklands (the other financial centre) ie skyscrapers. You can see most of London's really well-known buildings from the Eye.

Then if you have time you can walk across the Thames over the footbridge next to the London Eye, and that gives you great views as you're doing it, and then on the other side you're 10 mins walk from Trafalgar Square (Nelson's Column, National Gallery), near to 10 Downing St and Horseguards Parade; if you go really fast you might have time for Churchill's War Rooms (WWII command bunker).

Update

Going into London, at Clapham Junction: get the first train from platform 4, they all go to London Waterloo. Train every 5 or 10 mins.

Going back to the airport, at Waterloo: get the first train from platforms 1-4, they all go to Clapham Junction. At Clapham Junction: change to platform 13 and wait for a train where the electronic display board on the platform shows "Gatwick Airport" as one of the stops. They're at about 15 min intervals.

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    I'm not sure changing at Clapham Junction should be recommended for a traveler unfamiliar with London and little time to lose. Especially on the way back, he'd have to find a train from Waterloo that calls at Clapham Jn (most do, but not all), and then find a Gatwick-bound train there. For the Eye, Victoria and the Circle Line to Westminster would be a lot more navigable. – Henning Makholm Oct 13 '15 at 20:00
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    @HenningMakholm - How to find a train to Clapham Junction from Waterloo. 1. Go into Waterloo. 2. Look at the board for "Next fastest train to..." and look at the Clapham Junction option - it'll tell you the train time and platform. (I'm not 100% sure if CLJ is on that board or not, but I'd be surprised if not.) – AndyT Oct 14 '15 at 9:59
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    @AndyT: I'd trust myself to make that journey because I have some experience with navigating London public transport already (except I'd not necessarily using the "next fastest train" -- because almost all trains call at CLJ, much of the time the next fastest train will be one that is just about to depart before you have time to get from the board to the platform). But I wouldn't advise an inexperienced tourist to gamble his flight connection on not confusing himself somewhere along the way. – Henning Makholm Oct 14 '15 at 12:21
  • @HenningMakholm - fair points. – AndyT Oct 14 '15 at 12:36

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