Tesco share price has wavered in the past few days as investors focus on the deteriorating UK economy. The TSCO stock retreated to 265p, which was much lower than this month’s high of 272.2p. It is almost 10% above the lowest level this year, giving the company a market cap of about 20 billion pounds.
The UK is moving towards a recession.
Tesco is a leading British retailer that has thousands of stores in all corners of the country. In the past few years, the company sold its international businesses in a bid to focus on its UK segment. Therefore, like Lloyds Bank, Tesco is widely seen as a barometer of the health of the country’s economy.
Recent data shows that the country’s economy is not doing well. According to Citigroup, the country’s inflation is set to soar to over 18% in January 2023. The Bank of England (BoE) estimates that inflation will soar to 13%, while Goldman Sach believes that it will rise to 15%.
Therefore, soaring inflation will likely lead to a significant slowdown in the company’s business. The company’s recent results showed that its total sales rose by just 2% to £13.57 billion. Its UK retail business declined by 1.5%, while its ROI division fell by 2.4%. This performance was offset by its Booker division, whose revenue rose by 19.4%, and Tesco Bank, whose revenue rose by 38.8% to £261 million.
Tesco share price forecast
The four-hour chart shows that the TSCO stock price has ascended in the past few months. Along the way, the stock has formed an ascending channel pattern that is shown in green. This week, it moved to the lower side of the channel. It also moved to the 38.2% Fibonacci Retracement level while the Relative Strength Index (RSI) tilted lower.
Therefore, the stock will likely continue falling as sellers target the 23.6% retracement level at 256p. The alternative scenario is where the stock resumes the bullish trend and retests the upper side of the channel at around 271p.
