Lloyds Share Price Forecast Ahead of the BOE Rate Decision

Summary:
• The Lloyds share price is in a tight range ahead of the upcoming interest rate decision by the Bank of England (BOE)

The Lloyds share price is in a tight range ahead of the upcoming interest rate decision by the Bank of England (BOE). The stock is trading at 51p, which is close to its year-to-date high of 51.65p. Other UK banks like Barclays and Natwest share prices have also done well.

Bank of England decision

Last week, the biggest catalyst for the Lloyds share price was the company’s earnings. The bank defied what analysts were expecting when it reported a relatively strong quarter. Its pre-tax profit rose to 2 billion pounds from about 1 billion pounds last year. This was a better performance by 50% than what analysts were expecting. 

Its revenue rose by 20% to more than 4.1 billion pounds. At the same time, the company said that it was adequately funded since it had about 4 billion pounds in excess capital. Its capital tier one ratio rose to 17.2%, making it one of the best in the UK. Its open mortgages rose by 8% to more than 293 billion pounds.

This week, focus will be the upcoming interest rate decision by the Bank of England and the Federal Reserve. The Fed is expected to sound a bit hawkish when it publishes its decision later today. Similarly, the Bank of England (BOE) will also sound hawkish on Thursday. It will hint that interest rates will rise sooner than expected.

A hawkish BOE is usually bullish for a company like Lloyds that generates most of its income from interest-rates-tied products. Indeed, expectations of higher interest rates is probably what has pushed the Lloyds share price higher.

Lloyds share price forecast

On the four-hour chart, we see that the Lloyds share price has been in a strong bullish trend lately. The bull run accelerated when the stock rose above the key resistance level at 47p. At the same time, the stock has remained solidly above the 25-day and 50-day moving averages while the MACD has moved above the neutral level. 

Therefore, with the BOE expected to turn hawkish, there is a possibility that the stock will maintain a bullish trend as bulls target the key resistance at 60p. This view will be invalidated if the stock declines below 45p.