- Summary:
- In this Lloyds share price forecast, we explain why the stock is set to rise above 50p according to analysts at RBC, JP Morgan, and Deutsche Bank
The Lloyds (LLOY)share price is holding steady ahead of the latest Bank of England (BOE) interest rate decision. The stock rose by almost 1% on Wednesday and closed at 47.30p. This price was about 10% above the highest level in July. Other bank stocks like NatWest, Barclays, and HSBC have also done well this week.
Bank of England decision
The BOE will conclude its two-day meeting on Thursday. This will be a notable decision since it will be the first one without Andrew Haldane, the hawkish official who resigned recently. Therefore, with the number of Delta variant patients rising, the bank is expected to sound a bit cautious.
It will also leave interest rates and quantitative easing policy unchanged. Still, with inflation above its target of 2%, there is a possibility that the BOE will signal that it will soon start tapering its asset purchase program. This is in line with what Hande Kucuk of the National Institute for Economic and Social Research told FT. He said:
“Now is the time for the monetary policy committee to prepare the ground. A clearly communicated, gradual approach was needed “to avoid a significant tightening in financial conditions that might risk the ongoing recovery from the pandemic”.
The BOE interest rate decision is important for the Lloyds share price because of the role in the UK economy. It is the biggest bank in the country and is also the biggest mortgage provider. The decision comes a week after the bank delivered strong results, pushing it to hike its dividend. It made a pre-tax profit of $2.9 billion and announced a 0.67 pence dividend.
Still, there are worries about the strength of the UK economy as the government prepares to end the furlough program.
Analysts are optimistic about the LLOY share price. In a report last week, those at Royal Bank of Canada said that the stock will rise to 51p. On the same day, those at JP Morgan boosted their forecast to 60p. Those at Deutsche Bank see it rising to 57p.
Lloyds share price forecast
In my May forecast for Lloyds Bank, I wrote that the shares will rebound in August. Now, turning to the four-hour chart, we see that the stock has formed a small inverse head and shoulders pattern. It also remains above the 50-day and 25-day EMA. The two lines of the MACD have also moved above the neutral level.
Therefore, I reiterate that the stock will maintain the bullish trend in August, with the next key level to watch being 50p. On the flip side, a drop below 45p will invalidate this view.
