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NatWest’s share price has been in a consolidation phase as investors respond to the ongoing weakening of the UK economy. Currently trading at 221p, the stock is slightly below its year-to-date high of 247p but remains about 25% higher than its lowest point in March this year. It has also outperformed other UK banks like Lloyds Bank and Barclays.
NatWest, formerly known as Royal Bank of Scotland, is a major UK bank with a market cap of over $28 billion. The UK government is one of its largest shareholders, having acquired a 62% stake after providing the bank with over £45 billion during the financial crisis. The government is gradually reducing its stake by selling shares in the open market and plans to completely exit its position by 2025.
Recently, NatWest’s share price has been consolidating as investors express concern about the UK’s economic situation. Recent data suggests that the country is in a recession, with both business and consumer confidence declining sharply while inflation remains at its highest level in over three decades.
Despite these challenges, NatWest is expected to benefit from higher interest rates set by the Bank of England. In its efforts to combat inflation, the BOE has raised rates in each of its last five meetings. These rate hikes are likely to boost NatWest’s interest income, given that the bank manages over £1.5 trillion in assets.
In my previous analysis, I noted that NatWest’s stock had been in a consolidation phase, which has continued over the past few days. The stock has formed an ascending triangle pattern and is currently positioned along the 25-day and 50-day moving averages, with the Relative Strength Index (RSI) at a neutral level.
Given this setup, NatWest’s share price is likely to experience a bullish breakout in the coming weeks due to the ascending triangle pattern. However, if the price falls below the support level at 200p, this bullish outlook would be invalidated.