Can Barclays shares reverse latest drop or has a bearish trend set in?

• Barclays shares drop 2.85% in the last five sessions.
• Could Barclays share price drop below 140p?
• Analysts remain bullish despite recent slump.
• Want to trade Barclays shares? Open an account today.

While Barclays shares rose modestly on 14 January, over the last five sessions they have dropped 2.85%. Indeed, the Barclays share price has fallen from 157p to 152p in the last five trading sessions, bucking an otherwise positive trend over the last four weeks. Although Thursday’s closing price (152p) was 5.64% higher than we saw on 15 December (144p), a bearish sentiment may be setting in.

Analysts not ready to reverse forecasts yet

Despite the recent trend, Morgan Stanley, Credit Suisse Group and Goldman Sachs have all maintained their neutral ratings. Although equity analysts aren’t moving to a negative rating just yet, the possibility of Barclays shares dropping below 140p is possible. Comparatively speaking, that’s better than the lows witnessed in 2020. However, Brexit uncertainty and COVID-19 restrictions are weighing heavy on the bank.

The UK’s departure from the EU earlier this month closed a lot of previously open doors. However, financial services agreements remain a sticking point. Negotiators are now working towards a March deadline, after which banks in the UK and Europe should have a better idea of how money will flow between the two nations. Another factor that may be pushing down the Barclays share price is interest rates.

The UK is still gripped by COVID-19 lockdowns. Interest rates are likely to remain low for some time due to the economic damage caused by government restrictions. The Bank of England may also recommend negative interest rates. Silvana Tenreyro, who sits on the Bank of England’s monetary policy committee, has suggested that a rate below zero could stimulate economic growth in the wake of COVID-19.

Will negative interest rates help or hinder Barclays’ share price?

Tenreyro believes this strategy wouldn’t harm the profitability of banks and has the potential to aid the UK’s economic rebound. However, interest rates of 0.1% have already impacted Barclays’ bottom-line. Therefore, more talk of cuts may be adding to the current bearish trend. But despite the current dynamics, UBS and Jefferies Financial Group analysts are bullish.

The former reiterated its buy rating this week, while the latter has maintained a Barclays share price target of 227p. Given the current slump, which may be a long way off. But the message from analysts is that Barclays shares have potential. Whether or not the current downswing turns into a sustained freefall is unclear. Brexit and COVID-19 remain uncertainties that could swing the market in either direction. However, with neutral or buy ratings currently in place, the question appears to be when not if the Barclays share price will get back on track.

Do you think the Barclays Share price slump will be short-lived?

Open a demo account to try your hand at online trading. Alternatively, for a small deposit, you can speculate on Barclays shares with spread bets or CFDs. Spread bets are completely tax-free, while CFDs are free from stamp duty.¹ You can also buy and take ownership of UK shares for just £3 with us.²

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_{1. Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.}

_{2. Deal three times or more in the previous month to qualify for our best rate.}