Lloyds share price moved above an important resistance level this week as stocks staged a strong recovery. The LLOY stock jumped to a high of 47.17, which was the highest level since April 29 of this year. This price was about 23% below the highest level this year, giving it a market cap of over 31 billion pounds.
Lloyds Bank has been in a consolidation mode in the past few months as investors focus on the performance of the UK economy and soaring interest rates. Analysts believe that the country will move to a recession in the coming months as the cost of inflation remains at an elevated level. Data published on Wenesday showed that the UK inflation dropped from 10.1% in July to 9.9% in August. Core inflation, which excludes the volatile food and energy products rose to 6.3%.
This trend was mostly because of energy subsidies. Still, analysts believe that UK inflation will continue rising in the coming months. Lizz Truss, the new prime minister has pledged to lower the cost of energy, which will lead to a substantially high budget deficit. At the same time, the Bank of England (BOE) is expected to keep hiking rates when it concludes its meeting next meeting.
A key positive for Lloyds share price is the company’s dividend. In its last financial releases, Lloyds Bank decided to hike interest rates by 20% to 0.80 pence per share. It has a dividend yield of 4.54%, which is higher than the FTSE 100 average of about 3.82%. Therefore, with interest rates rising, analysts believe that the bank’s dividends are safe and could keep growing in the coming months.
The daily chart shows that the LLOY share price has been in a strong bullish trend in the past few days. It managed to rise above the important resistance level at 46.40p, which was the highest point on June 8, July 28, and August 18. The stock has moved above the 25-day and 50-day moving averages while the Awesome Oscillator has moved above the neutral point.
Therefore, there is a possibility that the stock will continue rising as bulls target the next key resistance level at 50p. A drop below the support at 44p will invalidate the bullish view.
This post was last modified on %s = human-readable time difference 09:27