Barclays (BARC) is preparing to publish its financial results covering the bank’s 2020 fiscal year in a week where multiple economic data will also be released to the markets, with traders possibly preparing to digest the information to assess what might come next for the bank in coming months.
During the week ended on 19 February, along with Barclay’s FY financial report, the UK will publish its quarterly GDP data while the research firm IHS Markit will also release its widely-followed Purchasing Manager Index (PMI) report for the country – with both publications possibly having a great deal of impact on the share price of the British bank.
As we approach final results on 18 February, the following Barclays share price forecast aims to determine potential path that the stock price might take, depending on what the data suggests and based on the macro environment the bank is currently navigating.
Vaccinations, Brexit, the UK economy and the future of Barclays
Multiple drivers seem to be influencing the path of Barclay’s stock price, including the progressive rollout of vaccines in the UK, the ripple effects of an awkwardly negotiated Brexit agreement with the European Union, and the pace and shape of the economic recovery in the country in the aftermath of the virus crisis.
Staring with the virus situation, the UK is currently in a strict lockdown that could last until the end of March, with cases seemingly heading downwards, even though hospitalisations have surged to their highest levels since the first wave of the virus back in April.
Unemployment data covering the three-months ending on February this year – to be released on 22 February – will provide a closer look in regards to the impact of lockdowns on the country’s employment landscape, while the release of other key economic markers, such as the UK’s gross domestic product and IHS’s PMI Index, will also contribute to shaping the market’s view of where the economy might be heading.
Based on the information provided by these reports, analysts will likely have a clearer view as to where bank earnings might be headed over the next few months, although most of the Barclays share price forecasts may have already incorporated the worst-case scenario for the bank’s top and bottom line resulting from the reintroduction of lockdowns in the country.
In this regard, it will be important to track where the data lands in the context of the market’s expectations, as worst-than-expected economic markers could lead to a sharp correction in Barclays shares if it suggests the Covid crisis might endure for longer than expected.
Barclays share price forecast
A recent message from Bank of England Governor Andrew Bailey has resonated across the financial markets today, with the head of the central bank saying that the institution will delay its discussions regarding the introduction of negative interest rates to the British economy for at least six months, to give banks enough time to prepare in case it decides to eventually take that road.
The news, although not necessarily good since negative rates would remain on the table, have eased the market’s nervousness about the implementation of such a measure on short notice, which would further deteriorate banks’ revenues from traditional lending activities.
Meanwhile, Barclay’s chief executive Jes Staley pointed to the bank focusing on markets outside the European Union during the post-Brexit era, emphasising that he sees many more opportunities outside the European economic bloc – a long-term partner for the bank before Brexit – as the United Kingdom remains the world’s second-largest financial centre.
Of the 18 analysts providing 12-month price targets for Barclays, the median target is 172.5p, with a high estimate of 235p and a low of 114p. The median estimate represents a 18.33% increase from the last price of 145.78. Four have a buy rating and eight an outperform, according to Refinitiv.
From a technical standpoint, Barclays’ share price has kept advancing since the early November uptick caused by the release of positive vaccine data from Pfizer (PFE), with the bank’s shares topping at the 160p level after rallying furiously on the back of the news.
Both the weekly and daily charts for Barclays shares show that the stock price is approaching important resistance, including the 1.618 Fibonacci extension resulting from the stock’s pre-vaccine highs and lows, while there is a long-dated trend line resistance that traders should also keep an eye on as a potential ceiling for the price action in case the upcoming earnings report and economic data releases end up prompting a short-term rally.
As of now, the stock appears to have entered a consolidation phase ahead of its final results, with the 130p level serving as support for now.
In the absence of any meaningful catalysts, Barclays’ share price may continue to hover between 130p and 160p for a while, and any break below or above these levels should be considered as a potential trend-changing signal.
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