The Lloyds share price has been in a tight range recently. The LLOY stock closed at 47.00p on Monday, slightly higher than last week’s low of 45.6p. The company’s shares have struggled after they rose to 50p early this month.
Lloyds Bank news: The biggest catalyst for the Lloyds stock price this week will be the interest rate decision by the Bank of England (BOE). This decision is important because, unlike other banks like HSBC, Standard Chartered, and Barclays, Lloyds is a national bank. It has limited exposure abroad and is the leading player in the UK mortgage industry.
Therefore, the LLOY stock will react to the latest BOE rate decision because of its impact on margins. Analysts expect that the bank will leave interest rates unchanged. They also expect the bank to avoid the talk of tapering in a bid to avoid significant moves on the pound. Still, a hawkish BOE will be seen as a positive thing for Lloyds since it will send a signal that the bank will improve its margins. Indeed, American banks like Goldman Sachs and Morgan Stanley have jumped after last week’s hawkish decision.
The decision comes at an important time for the UK. Recent economic data has been relatively strong. For example, inflation has jumped to the BOE target of 2.0% while the unemployment rate has retreated to 4.8%.
The daily chart shows that the Lloyds stock price has bounced back from last year’s low of 23.26 to above 50p. This is a 115%+ increase. The stock has also faced some resistance at the 50% Fibonacci retracement level. It is also trading at the 25-day and 50-day exponential moving averages. In my view, this retreat is normal since the stock has just rose to the psychological level of 50p. Therefore, the shares will likely keep rising as bulls target the next psychological level of 55p. However, a drop below 45p will invalidate the bullish view.
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