FTSE100 finally above 6000

FTSE 100 had spurred sharply higher last week after an enthusiastic buying in the wake of the compromise deal on the US fiscal cliff, approved spot on with the deadline. However, that rally of gains came to an end yesterday, with traders and investors taking profits following the exuberant rally and dragging London’s benchmark index down 25.26 points to 6,064.58, the first time the benchmark index finished lower this year.

Where is the British Pound heading?

The British Pound has weakened 0.4 percent in the past six months, the dollar fell 4.5 percent and the euro gained 2.7 percent. The British Consortium had announced that sales at UK high street stores open at least a year gained only 0.3 percent compared to a year earlier, after rising 0.4 percent in November, This had dragged down the GBP to depreciate for a third day versus its neighbour the Euro.

Any Quantitative Easing?

The Bank of England is not likely to restart its money-printing campaign even though the British economy is wobbling on the brink of a triple dip recession. Interest rates are still on their lowest values ever and the BoE has already purchased 375 billion pounds of British government bonds along with launching a funding or lending scheme to provide cheap credits to banks, hence encouraging them to offer loans to clients. Positive signs from these schemes are already showing in November mortgage approvals as they were at their highest monthly total since last January.

GDP 2013: What are the Forecasts

The final snapshot of the UK economy is due later this January and is expected to show that economic activity in quarter four was close to flat if not possibly a contraction by 0.2 per cent. The Euro region as a whole would contract by 0.4 per cent in 2013 announced the European Commission, markedly worse than the 1.4 per cent growth in 2011. It cuts its forecasts for 2013 growth in Germany, France, Italy and Spain as it predicted that unemployment would rise to a fresh peak of 11.8 per cent next year. Even though the UK is expected to grow by just 0.9 per cent next year, Brussels believes it will expand more quickly than any of the major economies of the eurozone. The commission has predicted a growth of 0.8 per cent for Germany, 0.4 per cent for France, a contraction of 0.5 per cent for Italy and a cutback of 1.4 per cent for Spain.