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NatWest’s share price has experienced strong bullish momentum this week, reaching 243p, the highest level since December 2019. This marks a 176% increase from its lowest point in 2020, making it the top-performing banking stock in the UK.
The primary driver behind this rise is the shift in monetary policy in both the UK and the United States. In December, the Bank of England (BOE) became one of the first major central banks to raise interest rates by 0.25%. Analysts anticipate that the BOE will increase rates to around 1% this year to combat rising inflation.
Additionally, on Wednesday, the Federal Reserve signaled a more hawkish stance for the year, indicating plans for about three rate hikes. Although NatWest does not operate in the United States, the Fed’s actions influence global banking conditions, which can indirectly affect the stock.
This week, a significant technical development occurred. NatWest’s share price broke above a key resistance level at 235p, invalidating a potential double-top pattern. The stock has also surpassed the 25-day and 50-day moving averages, with the MACD indicator moving out of the neutral zone. Furthermore, it has climbed above an ascending trendline.
Given these factors, the path of least resistance for NatWest’s share price appears to be upward, with the next key resistance level at 258p, which was the peak in 2019. However, this bullish outlook would be challenged if the stock falls below the support level at 230p.