Following the decision of the Bank of England not to delve into the negative rates arena, UK banking stocks are finding their rhythm in the FTSE today. Lloyds’ share price is doing well, gaining 3.67% as at the time of writing.
As part of the commentary contained in the BoE statement, the BoE says that there are risks if negative rates are used in under 6 months and that UK banks would need that length of time to adjust to the situation. The asset purchasing facility of the BoE was also kept stagnant, as the apex bank expects economic recovery later in 2021.
BoE Chief Andrew Bailey also said that the responses it got from consultation with UK banks show that zero rates would pose a lesser challenge operationally than negative rates. Bailey’s comments were covered by Reuters.
Technical Outlook for Lloyds Share Price
Today’s surge in Lloyds share price comes off the BoE statement and pushes the stock above the 34.77 resistance. A 3% upside penetration close is enough to confirm the breakout, as bulls target 35.97. A further advance could allow Lloyds’ share price to inch towards 37.02. This advance would enable the stock to overcome the progressively lower highs and proceed with a strong recovery.
On the flip side, a failure to maintain the breakout move above 34.77 could lead to a faltering of price. A pullback towards the trendline could then be on the cards, with 33.09 and 32.10 lining up as potential support targets. Dip-buying at those areas cannot be ruled out.
Lloyds Share Price; Daily Chart