Barclays share price is up by almost 3% today as investors focus on the progress on Brexit. The stock is trading at 140p, which is significantly above the Friday’s low of 134p. Other UK banks like Lloyds and NatWest are also in the green.
Why are Barclays shares rising? Barclays stock is rising because of the rising hopes that the UK and European Union will reach an agreement about Brexit. This is after the two sides agreed to continue the negotiations until the bitter end. With no deadline by the two sides, it means that the two could negotiate until December 31st.
According to media reports, some progress has been made. For example, the EU is said to be backing down from imposing lighting tariffs if the UK reneges on key parts of the agreement.
Why does Brexit matter for Barclays? Barclays is one of the biggest banks in the UK and its Barclaycard has a substantial market share. Therefore, a no-deal Brexit would be negative for the overall British economy, which would have an impact on Barclays share price and its earnings.
In addition, a no-deal Brexit would push the Bank of England (BOE) to implement negative interest rates for the first time on record. That would affect the bank’s earnings because it depends a lot on interest income.
What next for Barclays share price? On the daily chart, we see that Barclays share price has been in consolidation in the past few days. After reaching a multi-month high of 152.22 in November, the price has been moving sideways. It also formed a double-bottom pattern at 133.20 and is slightly below the 61.8% Fibonacci retracement level.
Therefore, in the near term, I suspect that BARC shares will continue rallying as bulls aim for the high of 152.22. However, a move below the support at 133.20 will invalidate this prediction.
