The Barclays share price has surged to the highest level since May 2018 as investors reflect on the strong bank earnings and the changing monetary policy talk. The BARC stock is trading at 200p, which is about 178% above the lowest level since March 16th. It has risen by more than 30% this year alone.
Earnings and interest rates
There are two main catalysts for Barclays share price. First, analysts are increasingly positive that major central banks will start turning hawkish in the near term.
For one, analysts at Goldman Sachs expect that the Bank of England (BOE) will start hiking interest rates in November this year. This is relatively sooner than the previous estimate that the bank will start hiking interest rates in March next year. The same view is shared by analysts at ING and Morgan Stanley.
In fact, analysts believe that the BOE will start tapering its asset purchases and start hiking interest rates at the same time. Such a move will be positive for most banks, including Barclays. At the same time, other central banks, including the Federal Reserve and the European Central Bank (ECB) will likely start hiking rates in a bid to contain inflation.
Second, the Barclays share price is rising as investors reflect on the strong quarterly results from the biggest American banks. Last week, most banks recorded strong results, with Goldman Sachs recording the best performance. This performance was driven by investment banking and wealth management. This is notable since Barclays is a leading bank in both investment banking and wealth management. Therefore, analysts believe that the bank also did relatively well in the quarter.
Barclays share price forecast
The daily chart shows that the Barclays share price has been in a bullish trend in the past few weeks. The price managed to move above the key resistance level at 191p, where it struggled to move above in March and April. It has also moved above the 25-day and 50-day moving averages. The Relative Strength Index (RSI) has also been in a major bullish trend.
Therefore, the stock will likely keep rising as bulls target the next key resistance level at 250p. However, in the near term, a break and retest pattern, where the shares retest the key support at 191p is likely. This pattern is usually a sign of a continuation.