Lloyds Share Price May React to Brooks McDonald Sale, FCA Changes

Summary:
• Lloyds share price could be impacted by the latest acquisition of one of its offshore divisions, as well as the scrapping of Libor in 2021.

Lloyds Banking Group’s offshore wealth management business will be in new hands. Lloyds share price may be in for some significant price movement soon as Brooks Macdonald has signed an agreement to takeover clients and assets of Lloyds Bank International and Lloyds Investment Fund Managers for a reported sum of nearly £10m. 

This deal transfers the management of close to £1billion in managed funds to Brooks, and also comes with a referral services agreement where clients of both entities will introduce products and services to each other’s clients. The deal is a cash deal and will still have to pass through regulatory approval before completion in the last quarter of the year. 

Meanwhile, Lloyds share price is down 1.97% on the day, as banks in the UK get ready for life under a new chief executive for the Financial Conduct Authority (FCA), the regulatory watchdog of the UK financial services industry. Nikhil Rathi, the outgoing head of the UK division of the London Stock Exchange, is expected to preside over an FCA that could be granted new powers to scrap the Libor interest rate benchmark. The decision to end Libor came a few years ago after a massive scandal ended with banks being fined record amounts for abusing the interest rate reference.

Download our Q2 Market Global Market Outlook

Outlook for Lloyds Share Price

The daily chart shows Lloyds share price currently trading within a symmetrical triangle, after a period of consolidation following the steep drop from December 2019. Price found resistance at the 32.95 price level, which closely interacts with the triangle’s upper border. 

If Lloyds share price can get some joy from the acquisition news and breaks above the triangle, the next logical target would be 34.77. This price level is where we have the highs of 29/30 April and the lows of 9/10 June 2020. Continuing advance places Lloyds share price in a position to attain 37.47 (highs of 26 March as well as 8/9 June 2020), 40.66 represents the price projection from the triangle breakout.

On the flip side, a slump in Lloyds share price may conform to the technical expectation of this particular triangle, as the preceding trend before the consolidation was a downtrend. This scenario opens the possibility of a price decline, which could extend towards 29.76 and 27.47 if the triangle breaks down.