Barclays Share Price at Risk as Negative Rates and Brexit Weigh

Barclays share price was lower by 2.25% on Friday and was back below the 100p level as talk of negative rates in the U.K. added to Brexit fears. The company’s stock has struggled alongside the rest of the banking sector as the economy was put on a virus freeze and the recent green shoots of recovery have been soured by the return of Brexit hostilities and a threat of further nationwide lockdowns.

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Yesterday saw talk of negative interest rates as a possible policy tool from the Bank of England in the event of a No Deal Brexit and this would be another headwind for lenders. Dominic Raab has now flown to start talks with U.S. lawmakers after Democrat critics of the U.K.’s stance on Brexit threatened it would hamper a trade deal between the two countries in a Biden administration.

It emerged yesterday that two Barclays traders had tested positive for the Coronavirus and this resulted in them being sent home. The company said that others in contact were asked to quarantine for 14 days but the statement was vague on the number. Trading desks have been a source of profits in the recent crisis with Barclays Corporate and Investment Banking (CIB) business helping to offset losses in retail arms with a 31% revenue build in H1 2020 versus a 21% reduction in Consumer, Cards, and Payments (CC&P).  

In the U.K. economy, retail sales for August showed a continued recovery today, but the pace was slower. Annual sales rose by 2.8%, which was below market expectations but double that of July. The recovery could be hampered by further lockdowns as the North of England faces further restrictions, while talk of a second national lockdown gathers pace, although Matt Hancock insisted it would be a line of last defence. 

Barclays Technical Outlook

In my last article on the company, Barclays was setting up for potential gains but the share price failed to trouble the 112.88 resistance level and dropped back through the support level noted. I warned that a close back through the triangle support would be time to cut losses and the 104p close signaled that move lower. We are testing support at 98.50p but no buy signal is in play at present. Further support is indicated at 92.00p if a move lower continues.

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