Three events set to move the FTSE 100 this week

Keir Starmer will outline a timetable to step down as prime minister in a morning statement today. The pound has fallen to $1.3165 and US and Iranian officials have resumed 60-day nuclear talks in Switzerland. Market participants are watching all three developments for potential impact on the FTSE 100.

Starmer’s government has faced criticism over weak economic growth and for raising taxes after campaigning on different promises. Recent local election losses and the appointment and rapid resignation of Peter Mandelson as UK ambassador to the United States, following the appearance of his name in the Epstein files, have increased pressure on the prime minister. Andy Burnham is discussed as a possible successor.

The pound slid to $1.3165, its weakest level since March and roughly 5% below this year’s peak. The divergence between signals from the Bank of England and the US Federal Reserve contributed to the decline. The BoE left Bank Rate at 3.75% last week, with seven members voting to hold. Federal Reserve officials also left rates unchanged but many indicated further hikes were possible.

A softer sterling typically raises sterling-denominated earnings and dividends for FTSE 100 companies that earn most of their revenue abroad. Examples include GSK, AstraZeneca, BP, Shell and mining groups such as Anglo American and Antofagasta. Companies exposed to travel and fuel costs, including IAG and Rolls-Royce, face higher operating costs if oil prices rise or routes are disrupted.

US and Iranian officials have begun a 60-day round of talks in Switzerland and have agreed to try to maintain a ceasefire in Lebanon. Traffic through the Strait of Hormuz increased over the weekend despite an earlier Iranian announcement of closure, and crude prices fell on that data. Israeli forces have intensified strikes against targets in Lebanon, creating a risk of wider disruption to regional shipping and energy supplies.

Banks with international operations, such as Lloyds, Barclays and HSBC, have exposure to trading and financing risks linked to geopolitical and economic volatility. Traders and portfolio managers are monitoring Starmer’s timetable, sterling flows and developments from the Swiss talks for any new information that could affect asset prices.

The FTSE 100 has lagged peers including the S&P 500, Kospi and the Nikkei 225 in recent weeks and has shown little net movement over the past three months. Analysts will be parsing today’s statement, currency moves and the Swiss talks for signals on how the index may respond in the coming days.