The FTSE 100: London's blue-chip benchmark, explained
The FTSE 100 is the United Kingdom's best-known stock market index. It tracks the 100 largest companies listed on the London Stock Exchange, ranked by full market capitalisation, the share price multiplied by the number of shares in issue. Launched on 3 January 1984, it is calculated in real time, published every second the market is open, and reviewed quarterly so that companies move in and out as their size changes. Traders often call it the "Footsie", and many treat it as a quick read on how UK large-caps are doing.
That last assumption deserves a second look, because the FTSE 100 is far less British than its name suggests. The companies are listed in London, but most of the money they make is earned somewhere else.
The index that lives abroad
Roughly three-quarters of the aggregate revenue earned by FTSE 100 constituents comes from outside the UK, much of it in US dollars. This produces the index's defining quirk: a weaker pound can actually lift the FTSE 100. When sterling falls against the dollar, the overseas earnings of these companies are worth more once translated back into pounds, so their reported profits and share prices can rise even as the currency weakens. It is one reason the FTSE 100 sometimes climbs on days when GBP/USD is sliding, behaviour that confuses anyone expecting a "UK index" to simply mirror the UK economy.
The flip side also holds. A strong pound can act as a headwind, trimming the translated value of foreign earnings. Because of this currency link, the FTSE 100 often behaves more like a proxy for global growth and the dollar than for the British high street. For a more domestically focused read on the UK, investors frequently watch the mid-cap FTSE 250 alongside it.
A tilt toward energy, miners, banks and staples
The FTSE 100's makeup reflects an older, value-oriented economy rather than the technology-heavy profile of US indices. It leans heavily toward a handful of cyclical and defensive sectors: energy majors such as Shell and BP; mining groups including Rio Tinto, Glencore and Anglo American; banks like HSBC, Barclays and Lloyds; consumer staples such as Unilever and Diageo; and large pharmaceutical names including AstraZeneca and GSK. Banks, healthcare, industrial goods and energy together make up a large share of the index's total value.
This composition matters. With little exposure to fast-growing tech and a lot of exposure to commodities and financials, the FTSE 100 tends to offer relatively high dividend yields and to move differently from the Nasdaq or even the DAX 40. You can compare its behaviour against other benchmarks on our all markets overview.
What actually moves the FTSE 100
Four forces do most of the work:
- The pound. Through the translation effect described above, sterling moves can push the index even when nothing else changes.
- Commodity prices. Crude oil feeds directly into Shell and BP, while iron ore, copper and gold drive the miners. A sharp move in oil or metals can shift the whole index, sometimes when other European markets are flat.
- The Bank of England. Rate decisions, guidance and quantitative tightening or easing affect the cost of capital for UK-listed firms and the level of sterling, so BoE meetings reliably add volatility.
- Global growth. Because constituents earn worldwide, the index is often as sensitive to US, European and Chinese data as it is to UK figures.
How to read the live chart
The live TradingView chart above shows the FTSE 100 in real time during London trading hours. Start with the timeframe: a daily or weekly view reveals the broader trend, while intraday views capture the reaction to a BoE announcement or an oil-price swing. Watch where price sits relative to moving averages, such as the 50-day and 200-day lines, to gauge momentum, and note prior highs and lows that often act as support or resistance.
For deeper context, glance at GBP/USD and the oil price alongside the index. If the FTSE 100 is rising while the pound falls, the currency translation effect is likely at work rather than genuine corporate strength. Volume spikes and large single-day gaps usually coincide with macro events, central-bank decisions or commodity shocks. Reading the chart in tandem with these drivers gives a far clearer picture than price alone.
Frequently asked questions
What is the FTSE 100?
It is an index of the 100 largest companies listed on the London Stock Exchange, ranked by market capitalisation. Launched in 1984 and reviewed quarterly, it is the UK's headline stock market benchmark.
Why can a weaker pound lift the FTSE 100?
About three-quarters of constituent revenue is earned abroad, often in dollars. When sterling falls, those overseas earnings translate into more pounds, which can raise reported profits and share prices even as the currency weakens.
Which sectors dominate the FTSE 100?
The index tilts toward energy majors, miners, banks, consumer staples and large pharmaceutical firms. It has relatively little technology exposure compared with US indices, giving it a more value-oriented, higher-yield character.
What are the main drivers of the FTSE 100?
The pound, commodity prices such as oil and metals, Bank of England policy and global economic growth. Because constituents earn worldwide, overseas data can matter as much as UK figures.
Is the FTSE 100 a good measure of the UK economy?
Only partly. Since most revenue comes from outside the UK, the index reflects global conditions and the dollar more than the domestic economy. The FTSE 250 is often watched as a more UK-focused gauge.
How do I read the FTSE 100 chart?
Choose a timeframe to see the trend, compare price with moving averages and prior highs and lows, and watch GBP/USD and oil alongside it to understand whether currency or commodities are driving the move.
This article is for informational purposes only and is not investment advice.