What’s Moving the Market: The Unseen Hand of Sterling
One of the most powerful yet often overlooked drivers of the FTSE 100 is the strength or weakness of the British Pound (£GBP). Given that roughly 75-80% of the revenues for FTSE 100 companies are generated outside the UK in foreign currencies like USD or EUR, a weaker Pound makes those overseas earnings more valuable when converted back into Sterling. This creates a significant tailwind for the index, especially for its multinational constituents. Conversely, a strengthening Pound can act as a drag, dampening translated profits. Therefore, keeping a close eye on the GBP/USD and GBP/EUR exchange rates is paramount for understanding the broader movements of the FTSE 100.