Trading the FTSE 100 in 2026 requires a strategic approach, especially as the index has recently crossed the historic 10,000 threshold. Whether you are day trading or investing for the long term, several unique mechanics govern how this “blue-chip” index moves.
Here are the key things to remember while trading the FTSE 100.
1. Understand the “Inverse Correlation” with Sterling
One of the most critical factors for the FTSE 100 is the value of the British Pound ($GBP$).
- The Global Nature: Roughly 75-80% of revenues for FTSE 100 companies are earned outside the UK (in USD or EUR).
- The Rule of Thumb: When the Pound weakens, the FTSE 100 often rises because those foreign earnings are worth more when converted back to Sterling. Conversely, a strong Pound can act as a “drag” on the index.
2. Sector Weighting Matters
The FTSE 100 is not a balanced reflection of the whole economy; it is heavily weighted toward specific “old economy” sectors. As of early 2026, three sectors account for over 50% of the index’s pre-tax income:
- Financials: Banks (HSBC, Barclays, Lloyds) and insurers.
- Energy (Oils): Giants like BP and Shell.
- Basic Resources (Miners): Rio Tinto, Glencore, and Anglo American.
Tip: If oil prices or industrial metal prices (copper, iron ore) are crashing, the FTSE 100 will likely struggle even if the rest of the UK economy is doing well.
3. Timing Your Trades
The index is most volatile and liquid during specific windows:
- The Open (08:00 GMT): High volatility as the market reacts to overnight news from Asia and the US.
- The US Crossover (14:30 GMT): When Wall Street opens, liquidity spikes. The FTSE 100 often “shadows” the movement of the S&P 500 or Dow Jones during this period.
- Dividend “Ex-Dates”: Most large UK companies pay dividends on Thursdays. When a big stock like HSBC or Shell goes “ex-dividend,” the index will automatically drop by a few points to reflect the payout.
4. Technical Levels to Watch (Jan 2026)
With the index trading near all-time highs, technical support and resistance are vital for entry and exit:
RSI (Relative Strength Index): Currently, the RSI has been hovering near “overbought” territory (above 70). Traders should be wary of chasing the rally at these levels and instead look for pullbacks to 9,930 or 10,000.o to your dashboard to delete this page and create new pages for your content. Have fun!
The 10,000 Level: This is now a major psychological support. If the index stays above 10k, the “bull run” is considered intact.
Summary Table: FTSE 100 Trading Checklist
| Factor | What to Watch | Impact |
| Commodities | Brent Crude & Copper prices | Positive for Oil/Mining stocks |
| Monetary Policy | Bank of England (BoE) rate cuts | Lower rates generally boost the index |
| Currency | GBP/USD exchange rate | Weak GBP = Tailwinds for FTSE 100 |
| Yield | Dividend yield (~3.4%) | Provides a “floor” for the index price |
Trading the FTSE 100 in 2026 requires a strategic approach, especially as the index has recently crossed the historic 10,000 threshold. Whether you are day trading or investing for the long term, several unique mechanics govern how this “blue-chip” index moves.
Here are the key things to remember while trading the FTSE 100.
1. Understand the “Inverse Correlation” with Sterling
One of the most critical factors for the FTSE 100 is the value of the British Pound ($GBP$).
- The Global Nature: Roughly 75-80% of revenues for FTSE 100 companies are earned outside the UK (in USD or EUR).
- The Rule of Thumb: When the Pound weakens, the FTSE 100 often rises because those foreign earnings are worth more when converted back to Sterling. Conversely, a strong Pound can act as a “drag” on the index.
2. Sector Weighting Matters
The FTSE 100 is not a balanced reflection of the whole economy; it is heavily weighted toward specific “old economy” sectors. As of early 2026, three sectors account for over 50% of the index’s pre-tax income:
- Financials: Banks (HSBC, Barclays, Lloyds) and insurers.
- Energy (Oils): Giants like BP and Shell.
- Basic Resources (Miners): Rio Tinto, Glencore, and Anglo American.
Tip: If oil prices or industrial metal prices (copper, iron ore) are crashing, the FTSE 100 will likely struggle even if the rest of the UK economy is doing well.
3. Timing Your Trades
The index is most volatile and liquid during specific windows:
- The Open (08:00 GMT): High volatility as the market reacts to overnight news from Asia and the US.
- The US Crossover (14:30 GMT): When Wall Street opens, liquidity spikes. The FTSE 100 often “shadows” the movement of the S&P 500 or Dow Jones during this period.
- Dividend “Ex-Dates”: Most large UK companies pay dividends on Thursdays. When a big stock like HSBC or Shell goes “ex-dividend,” the index will automatically drop by a few points to reflect the payout.
4. Technical Levels to Watch (Jan 2026)
With the index trading near all-time highs, technical support and resistance are vital for entry and exit:
- The 10,000 Level: This is now a major psychological support. If the index stays above 10k, the “bull run” is considered intact.
- RSI (Relative Strength Index): Currently, the RSI has been hovering near “overbought” territory (above 70). Traders should be wary of chasing the rally at these levels and instead look for pullbacks to 9,930 or 10,000.
Summary Table: FTSE 100 Trading Checklist
| Factor | What to Watch | Impact |
| Commodities | Brent Crude & Copper prices | Positive for Oil/Mining stocks |
| Monetary Policy | Bank of England (BoE) rate cuts | Lower rates generally boost the index |
| Currency | GBP/USD exchange rate | Weak GBP = Tailwinds for FTSE 100 |
| Yield | Dividend yield (~3.4%) | Provides a “floor” for the index price |
Risk Management
Because the FTSE 100 is currently at record highs, “gap risk” (where the market opens much lower than it closed) is a possibility.
- Stop Losses: Always use stop-loss orders, typically placed 1.5x the average daily volatility away from your entry.
- The 1% Rule: Avoid risking more than 1% of your total account balance on a single FTSE 100 trade.