Barclays’ share price dropped sharply on Tuesday following the bank’s decision to grant a cost-of-living pay raise to 35,000 UK staff. The stock fell by 5.05%, wiping out gains made in the previous two days. This decline highlights the challenges companies face as rising inflation in the UK puts pressure on wages and operational costs.

With inflation nearing 10%, labor unions are gearing up for confrontations with employers, and worker unrest, along with threats of strikes, are already evident in sectors like communications and aviation.

The pay increase, which begins on August 1, was agreed upon by Barclays and the Unite workers’ union. It includes staggered wage hikes, additional pension contributions, and enhanced overtime payments.

While the pay rise is a relief for Barclays’ junior and mid-level employees, it has raised concerns among investors about the potential impact on the bank’s revenue and profit expectations. This resulted in the biggest single-day drop in Barclays’ share price since March 4, 2022.

The sharp decline is currently testing support at the 147.48 price level, the low seen on March 7 and May 13. If this level breaks, the next target is 140.80, marked by the lows of April 7 and April 27, 2022. Further support levels are at 133.78 and 126.12, corresponding to the highs from June 18, 2020. The 130.00 mark, which represents the lows from March 6, 2020, and January 28, 2021, also serves as a potential support area.

Alternatively, a bounce from the 147.48 support level could allow the bulls to retest the 151.12 mark, the previous neckline of a triple bottom pattern. A continued upward move could target 156.92, the high from July 4, 2022, with 161.62 as the next potential resistance. The 167.86 and 173.60 resistance levels are additional upside targets, though they are not currently in play.