The Barclays share price popped by more than 3% on Thursday as investors reacted to the surprise interest rate decision by the Bank of England (BOE). The BARC stock ended the day at 182p, which was higher than this month’s low of 173p.
Barclays is a leading retail and investment bank with operations in the UK, US, and other countries. The company makes most of its money from consumer and business lending and from its investment banking business.
Therefore, the bank’s diversified income has made it have a better recovery than some other UK banks like NatWest and Lloyds Bank. Its trading business helped to offset its loan losses during the pandemic. Similarly, its lending business offset results from its investment banking this year when volatility declined.
The Barclays share price rose on Thursday because of the decision by the BOE to hike interest rates by 0.25%. This means that the bank will start putting billions of dollars in its accounts to work.
It is estimated that Barclays will substantially boost its interest income even if the BOE fails to boost rates again in the near future. For example, according to the Wall Street Journal, JP Morgan could earn more than $6.7 billion if the Fed hiked rates by just 1%.
The BARC share price also did well after the Fed hinted that it will implement three hikes in 2022. This is notable since the company has significant operations in the US.
The four-hour chart shows that the Barclays stock price has done relatively poorly in the past few days. The stock has crashed by more than 10% from its highest level this year. However, a closer look at the stock shows that it has formed a falling widening channel that is shown in red. It is also at the same level as the 25-day moving average.
Therefore, because of the widening wedge, there is a likelihood that the stock will have a bullish breakout in the coming days. If this happens, the next key level to watch will be at 200p. This view will be invalidated if the stock moves below the lower side of the channel.
This post was last modified on Dec 17, 2021, 04:16 GMT 04:16