Tesco share price has been in the red for the past few days as markets digest BoE’s latest interest rate decision. The TSCO stock price has slipped nearly 4% since Thursday but climbed 2.28% in the past week. The company’s shares have inched 11.54% in the year to date.
UK’s Economic Sentiment
Tesco, Britain’s biggest supermarket, announced on Thursday that it had beaten its target for the rollout of its rapid delivery service Whoosh. Whoosh was launched in 2021 and the online service is now available from 1000 Tesco Express Stores, beating its target of 800 stores by the end of February.
Even so, Tesco share price has been bearish for the past few days as UK’s economy continues to shrink and the cost of living crisis rises. Markets have been reacting to the latest interest rate decision by the Bank of England (BoE). Last week, BoE announced a 25-basis point hike in its base rate from 4% to 4.25%, its highest level since 2008.
The decision by the BoE was in line with market expectations following an unexpected jump in UK’s inflation. The latest UK Consumer Price Index (CPI) reading shows a 10.4% increase in inflation for February.
Data released by the Office for National Statistics earlier on Friday shows that retail sales volume increased by 1.2% in February, up from 0.9% in January. Non-food store sales volumes rose by 2.4% over the month because of strong sales in discount department stores, while automotive fuel sales fell by 1.1% over the same period.
Markets remain jittery amid growing fears that the US and UK economies might enter a recession in the second half of the year. A recession would be detrimental for retailers such as Tesco Plc.
Tesco Share Price Outlook
Tesco share price has been under intense pressure for the past few days as seen in the daily chart. Along the way, the stock has formed what seems like an inverted head and shoulder pattern and is trading along the neckline. The stock has moved slightly below and above the 25-day and 50-day moving averages, respectively. It is also moving above the 50-day and 200-day exponential moving averages. Its RSI has inched slightly higher into the neutral zone.
Therefore, the stock is likely to break out of its bearish trajectory as buyers target the next logical resistance levels at 264.5p and 280p. On the other hand, a move below the support level at 237.5p will invalidate this thesis.