If the forecasts are correct, the Natwest Share price could receive a welcome boost in the form of rising interest rates later today. Natwest (LON: NWG) has performed remarkably well over the last 12 months. As of yesterday’s closing price of 225.5p, the share price showed a 1-year change of 74.6%.
The U.K banking sector will be under the spotlight today when the Bank of England’s Monetary Policy Committee decides the fate of interest rates. The derivatives markets are currently pricing a 64% probability of a 15 basis point hike at today’s meeting. However, some analysts predict that rates may stay on hold until the Central bank’s December meeting.
Whilst the exact date is unknown, what is clear is that interest rates will be moving higher in the immediate future. Banking stocks typically do well in a higher interest rate environment, which should provide a tailwind for Natwest shares as we approach the seasonally strong month of December.
Price forecast
The daily chart highlights Natwest’s impressive performance this year. The shares are trending uniformly higher in a rising wedge formation. The validity of the trendline support was confirmed this week when the Natwest share price held the line at 220p.
As long as trend support holds, the share price should advance towards the top of the pattern at 250p. However, first, the price must overcome the October high at 235p. Despite repeated attempts to clear the level last month, the share price could not hurdle the barrier. Therefore, 235p is the first area of resistance, followed by 250p.
If the share price turns lower, the trendline, now at 221p, is the first support, followed by the 100-DMA at 214p, and the 200 at 201.7p. In my opinion, the share price could soon test the 235p area and potentially extend towards 250p. However, this relies on the price remaining above the trend support. On that basis, a close below 221p clouds the outlook, invalidating the immediate bullish projection.
Natwest Share Price Chart (daily)
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