NatWest Share Price Outlook. Is NWG a Good Value Stock?

NatWest share price made a strong bearish breakout recently as concerns about the UK economy continued. The NWG stock price crashed to a low of 241p, which was the lowest level since July 25. It has fallen by more than 12% from the highest level in August. Other FTSE 250 bank stocks like Virgin Money, Metro Bank, Barclays, and Bank of Georgia Group have all retreated.

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High-interest rates converge with an economic slowdown

NatWest is one of the biggest British banks with a market cap of over 30 billion pounds. The company owns some of the top brands in the country like Ulster, Royal Bank of Scotland, and Coutts among others. In total, the company serves more than 19 million customers and over $1 trillion in assets. In contrast, Lloyds Bank has over 30 million customers and over 5 trillion pounds in assets.

NatWest share price has crashed in the past few weeks as investors continue focusing on the dwindling UK economy. Analysts at Citigroup and Goldman Sachs believe that the country’s consumer price index (CPI) will jump to over 18% in the coming months. For one, the average retail energy price is expected to jump from under 2,000 pounds to almost 4,000 pounds.

Some analysts believe that Lizz Truss, the new prime minister, will announce a new plan to cap energy prices. If this happens, the implication is that the total public debt will continue surging in the coming months. 

The implication of the surging UK inflation is that the Bank of England (BoE) will be forced to keep hiking interest rates. Historically, banks like NatWest usually do well in a period of high interest rates. However, with the economic conditions deteriorating, there is a likelihood that loan growth and spending will be limited.

NatWest share price forecast

The chart below shows that the NWG stock price surged to a high of 284p last month. It then crashed hard last week as concerns about the British economy continued. As it dropped, it made a big down-gap and moved below the 25-day and 50-day moving averages. The stock also dropped below the important support level at 251p, which was the highest level on June 10.

Therefore, the NatWest share price will likely continue falling as sellers target the next key support level at 226p. A move above the resistance point at 260p will invalidate the bearish view.

Natwest share price