- Summary:
- Barclays share price gained 70 percent in 2024 , but faces multiple shifts in the operating environment in 2025. Will BARC sustain the upside?
Barclays share price has been on a scintillating run for the last two weeks, and its decline on Thursday is likely a blip. The stock gained 70% in 2024, but the onset of lower interest rates could disrupt the growth curve in 2025. That said, Barclays established an impressive bottom line in 2024 with successive quarterly profits. The bank reported revenues of £6.17 billion in the third quarter and beat EPS estimates by 29.68%.
Interest rates to sway Barclays earnings
The Bank of England (BoE) lowered UK interest rates 5.0% to 4.75% in November 2024 and kept the rates unchanged in its December Monetary Policy Committee (MPC) meeting. Inflation rate rose to 2.6% in December from November’s 2.3% diverging further from the BoE’s target rate of 2%.
A high inflation rate environment signifies that the BoE is likely to keep interest rates elevated in the medium-term. That is good for Barclays Bank share price as it safeguards its net interest margin.
On the other hand, MPC members will be keep to strike a balance between sticky inflation and economic growth. The UK’s economy contracted by -0.1% in October and is forecast to have stagnated in the fourth quarter of 2024.
Three of the nine MPC members voted for another cut in December, adding credence to the economic growth concerns. That raises the prospect that the BoE’s interest rate cuts this year could exceed the two seen in 2024. Ultimately, that could eat into Barclays (LSE: BARC) revenues.
The bullish case for Barclays share price
Barclays’ acquisition of Tesco Bank will come in handy and could neuter the impact of lower interest rates. The bank completed the acquisition of Tesco Bank for £757 million in November 2024, and onboarded the latter’s 3.8 million customers and a substantial loan portfolio.
A key existential downside to Barclays share price is the auto insurance scandal. Barclays lost its appeal aagainst the ruling in mid-December, but its termination of auto finance loans in 2019 could limit its exposure to compensation claims relative to peers like Lloyds Bank and Santander UK. Based on the discussion above, a bullish outlook for Barclays share price looks more likely in 2025.
Barclays share price prediction
Barclays share price pivots at GBX 266.10 and the momentum signals a likely continuation of the upside. That will likely drive the stock up to encounter the first resistance at GBX 267.25. However, an extended control by the buyers could break above that level and clear the path to test GBX 268.35.
On the other hand, moving below GBX 266.10 will shift the momentum to the downside. In that case, the first support is likely to be at GBX 265.25. Breaking below that level will invalidate the upside narrative. In addition, the momentum could extend the decline and test GBX 264.40.
