Barclays’ share price has bounced back this week after falling to 130p, closing at 145p yesterday following the Bank of England’s (BOE) interest rate decision. The stock has risen by more than 12% over the past few days.
Several factors are influencing Barclays and other UK banking stocks. First, in its interest rate decision, the BOE announced that negative interest rates are not currently a priority. However, the bank advised that UK banks should continue preparing for the possibility of subzero rates in the future. Negative rates could negatively impact major banks, particularly Lloyds and NatWest, which generate significant income from UK operations.
Secondly, Barclays’ share price is also benefiting from the strong performance of European and American banks. In January, US banking giants like Goldman Sachs and Morgan Stanley reported strong results, driven primarily by their trading divisions. Similarly, Deutsche Bank posted solid earnings yesterday.
As a result, investors are optimistic that Barclays will also report strong results on February 18. Additionally, the ongoing Brexit negotiations concerning financial services are impacting the shares.
In a previous article, I predicted that Barclays’ stock would likely get worse before improving, forecasting a drop to 133p before a rebound. This prediction was accurate, as the stock dipped to 130p and then began to recover. It has now returned to its ascending channel, though it appears to be forming a head and shoulders pattern.
Looking ahead, there are two possible scenarios. Barclays’ share price could climb to the upper end of the channel at 160p, or it may fall below the support level of 130p due to the head and shoulders pattern.