Barclays’ share price has faced significant pressure in recent weeks due to concerns about the UK economy and challenges in investment banking. The stock is currently trading at 151p, a notable drop from last month’s high of 173p.

Barclays operates globally with divisions in consumer and business lending, as well as investment banking. Its Barclaycard holds a strong market share in the UK. However, the company is dealing with several challenges.

First, the UK is on the brink of its worst economic crisis in decades. Recent data reveals a sharp increase in inflation and a significant drop in consumer confidence. Lower consumer confidence typically leads to reduced spending, which could negatively impact the bank’s loan growth.

Second, Barclays’ investment banking division is struggling. This year has been particularly tough for investment banking, with deal-making activity drying up. The Wall Street Journal reports that the volume of deals announced this year has fallen by over 80%, affecting firms like Barclays and Goldman Sachs.

Third, the bank is facing challenges in the UK housing market. Barclays recently acquired Kensington Mortgage, and as the housing sector slows down due to rising home prices, the bank may encounter difficulties.

Despite these challenges, Barclays has some positives. Rising interest rates are expected to boost the bank’s net interest margin, which analysts predict could increase to around 3%, assuming the Bank of England raises rates to 1.75%.

Additionally, the British pound has weakened significantly in recent months, now trading at its lowest level since 2020. While a weaker pound negatively impacts Barclays’ earnings in the UK, the bank’s substantial US operations provide a cushion, as the stronger dollar will help offset some of the currency issues.

Another potential bright spot for Barclays is its trading division, which could see some growth this quarter. A key factor influencing Barclays’ future performance will be the upcoming earnings reports from US banks like Wells Fargo, JP Morgan, and Citigroup, which will shed light on the banking sector’s overall health.

The four-hour chart shows that Barclays’ share price has been trending down in recent days, forming a bearish channel. The stock is trading below the 25-day and 50-day moving averages, while the Stochastic Oscillator has moved above the neutral level.

Given this, it’s likely that the share price will continue to decline as the bank earnings season begins, potentially testing the lower boundary of the channel at 145p. A move above 153p would invalidate this bearish outlook.