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Is the Lloyds share price a bargain ahead of BoE decision?

on Sep 19, 2022
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  • Lloyds share price has been in a strong bullish trend.
  • The Bank of England will start its monetary meeting on Wednesday.
  • Analysts expect that the bank will hike interest rates.

Lloyds (LON: LLOY) share price has been in a strong recovery phase in the past few weeks as UK bank stocks rebound. The stock rose to a high of 48.20p, which was the highest point since March 31st of this year. It has risen by more than 17% from the lowest level since July of this year.

Bank of England decision

Lloyds is one of the biggest banks in the UK. The company operates its eponymous brand and several others like Bank of Scotland, Halifax, and Scottish Widows among others.

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The company’s share price has dropped by more than 16% from its highest level this year as concerns about the UK economy remain. Because of its strong market share in the country, Lloyds is often seen as a barometer for the economy.

Recent economic numbers have not been encouraging. For example, inflation has remained at an elevated level while the British pound has plummeted to the lowest level since the 1980s. House prices have started dropping while the national trade and budget surplus have all waned.

The next key catalyst for Lloyds share price will be this week’s interest rate decision by the Bank of England (BoE). 

With inflation at an elevated level, analysts believe that the Bank of England (BoE) will continue hiking interest rates this week. Precisely, they expect that it will hike interest rates by 0.50% for the second straight month.

High-interest rates are usually positive for a company like Lloyds Bank. Besides, the company has assets worth trillions of dollars that it can monetise. For example, the most recent results showed that the company’s net interest income rose to over 6 billion pounds in the first half of the year. 

Analysts expect that this income will keep rising. However, the main challenge is that bank stocks tend to underperform during a recession.

Lloyds share price forecast

Lloyds share price

The LLOY stock price has been in a strong bullish trend in the past few days. It has risen above the important resistance level at 46.40p, which was the highest level in August. The pair has moved above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved close to the overbought level at 70.

Therefore, Lloyds Bank share price will likely continue rising as bulls target the next key resistance level at 50p. A drop below the support at 46.40p will invalidate the bullish view.