The FTSE 100 is expected to rebound following a recent selloff, supported by a declining pound sterling, which may boost earnings for multinational firms. The UKX index has shown early signs of recovery, with investor sentiment shifting toward defensive and export-oriented sectors.
- FTSE 100 rebounded 1.1% on March 4, 2026, following a 3.2% selloff
- GBPUSD fell to $1.2360, its lowest since November 2024
- Financials, industrials, and consumer sectors led gains
- Forward P/E ratio for FTSE 100 at 12.4x, below 10-year average
- Export-heavy firms such as HSBC and Unilever benefit from weaker pound
- Import-dependent firms like BP and Rolls-Royce face margin pressures
The FTSE 100 is showing signs of recovery after a 3.2% correction in the previous week, with market participants anticipating a rebound driven by improved risk appetite and a weakening pound. The UKX index, a key benchmark for UK large-cap equities, rose 1.1% in early trading on March 4, 2026, as investors reassessed valuations following the sharp sell-off. The pound sterling has dropped to $1.2360 against the US dollar, its lowest level since November 2024, reflecting ongoing concerns over UK economic growth and divergent monetary policies. This depreciation is particularly beneficial for FTSE 100 constituents with significant international revenue, including financial services firms like HSBC Holdings PLC and consumer staples companies such as Unilever PLC, whose overseas earnings gain strength when translated back into pounds. The decline in GBPUSD has also heightened inflationary pressures domestically, with import costs rising across sectors. Industrial firms reliant on imported raw materials, including Rolls-Royce Holdings PLC and BP PLC, may face margin compression, while consumer-facing businesses could see input cost increases. Nevertheless, the weaker pound is supporting export competitiveness, a key factor in the rebound narrative for UK equities. Market analysts note that the FTSE 100’s forward price-to-earnings ratio has fallen to 12.4x, below its 10-year average, suggesting potential undervaluation. The rebound appears to be broad-based, with financials leading gains (+2.3%), followed by industrials (+1.8%) and consumer discretionary (+1.4%).