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The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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    Barclays share price projected to bounce back after bad debt charge

    As the COVID-19 pandemic enters a second phase, investors in Barclays need to balance the woes of retail with the boom on the investment banking side. The question now with the stock trading near the 100p level, versus the low of the year at 73p, is which of the key fundamental factors at play for Barclays share price will win the day?

    Learn more about shares trading with ATFX

     

    Barclays share price exposed to £4.3bn bad debt charges

    The headline grabbing issue currently is of course the bad debt charges standing at £4.3bn. However, due to the vagaries of furlough and it being difficult to know how long households can stretch savings from the time of the initial pandemic shock in March, this provision could be anything from a tip of the iceberg, to a high-water mark. Against this there will no doubt be the benefits of Barclays being able to move to accelerate branch closures and trim costs as progress towards a cashless and perhaps increasingly branchless banking service continues. 

     

    Lending margins: a license to print money

    On the plus side we are looking at a company where despite the structural decline of the banking sector since the Global Financial Crash in 2008, aspects of the business are still strong. While it may not be something that most financial analysts emphasise, a near zero interest rate environment, and one which is likely to swing to the negative side. While most commentators are refraining from saying the banks are profiteering, maintaining mortgage rates some 3% above the Bank of England base rate of 0.1% should be a recipe to print money. The recent stamp duty reductions underline this idea. On the personal loan and credit card side the margins are even more expansive.

     

    Betting on M&A benefits

    But it may be that the ill wind of the pandemic actually serves Barclays to play to its strengths, rather than the vulnerable retail banking side. A positive side effect of the pandemic has been an increase in companies shoring up their balance sheets and raising cash from investors. There has also been a rise in M&A, as opportunities and bargains have sprung up in the sectors faring best and worst in the current exceptional environment. A case in point has been the takeover of William Hill by Caesars Entertainment. In this deal Barclays was among five investment banks sharing fees of up to £165m.

     

    Technical outlook: Barclays share price forecast to reach 140p

    Balancing the factors together regarding Barclays, one is also mindful of where the stock is in the one year trading range. At the end of 2019 the shares were nudging 200p, and are close to half this level currently. From a charting perspective the key here may be the July 98p floor. The shares bear trapped below this during September, but for much of October this has become new support, suggesting the start of an inverse Head & Shoulders pattern – a bullish development. As a chartist I would be looking for a break of neckline resistance to deliver an implied 140p target – essentially a revisit of mid 2020 resistance for Barclays shares. At this stage only a weekly close back below the July floor would really delay the technical recovery argument at Barclays.

     

    How to trade shares with ATFX

    Looking to trade Barclays shares and other major company shares? Open a live or demo account with ATFX to get up to speed. Start trading now to benefit from competitive spreads, high-quality trade execution, and no commission.

    1. Register for an account or log in to your existing account

    2. Open MT4 either on your desktop or mobile

    3. Search for Barclays shares in the market watch or symbols window

    4. Choose your position size

    5. Hit buy or sell, and then confirm the trade

     

    Barclays share price daily chart

    Daily chart showing Barclays share price daily movements for 2020

     

    How to start trading

    Looking to start trading and don’t know where to start? We’ve got the perfect guide to help you understand exactly how to start trading

    It’ll show you exactly what you need to do to get set up and start trading shares like Barclays.

     

    Last Updated: 30/10/2020

    This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


     

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