We report a theoretical framework to explain the characteristics of Fabry-Pérot (FP) resonances excited in a thin film-based grating consisting of a thin gold layer and a rectangular dielectric grating in the sub-wavelength and near-wavelength grating regimes. The zeroth-order diffraction inside the grating layer forms an FP resonant cavity with effective refractive index arising from an averaging effect between the refractive indices of the grating material and the filling material between the grating grooves. A simplified model based on Fresnel equations and phase matching condition is proposed to predict the FP resonant mode for the grating structure, this is compared with rigorous coupled-wave analysis to determine its range of validity. We also compare the performance of the proposed structure with other thin film-based interferometers for refractive index sensing applications, in terms of, sensitivity, full width at half maximum, figure of merit and dynamic range. The proposed structure has a full width at half maximum around 10 times to 60 times narrower than conventional surface plasmon resonance and conventional FP resonators. Thus, the figure of merit is higher than Kretschmann based surface plasmon resonance and FP structures by a factor of 20 and 2 respectively with a wider dynamic range. The total energy stored in the grating resonant cavity is 5 and 20-fold greater than the surface plasmon resonance configuration and the conventional FP structures. Since the resonator discussed here is an open structure, it is far better suited for liquid sensing compared to a closed FP structure.