Lloyds share price is struggling. It is down by more than 2% today, making it one of the laggards in the FTSE 100. From Wednesday, LLOY has dropped by more than 5.8%. Other banks like Barclays and NatWest are also in the red today.
What’s happening: The main reason why Lloyds shares are falling is because of Brexit. In a statement yesterday evening, Boris Johnson and David Frost said that the EU was making it difficult to reach a Brexit agreement.
They said that the EU should change its stance about access to the UK’s fishing waters. In the statement, they lamented that the UK would be the only country in the world without a say over its territorial waters.
Why this matters: A no-deal Brexit would be damaging to the UK economy. For one, the country has already lost more than 10,000 finance jobs and more than £1.2 trillion worth of assets. According to the BOE, a no-deal will also lead to more than 300k job losses.
All this matters to Lloyds bank because of its domestic nature and the fact that it does not have exposure to the financial trading industry. Indeed, most investors view Lloyds as a barometer of the UK economy.What about BOE? Lloyds share price is also probably falling because a no-deal Brexit would push the Bank of England to implement negative interest rates. That will eat into the company’s interest income.
So, what next for LLOY share price?
On the daily chart, we see that Lloyds share price has hit a wall between the 23.6% and 38.6% Fibonacci retracement levels. Still, it is slightly above the 25-day and 50-day exponential moving averages and the ascending black trendline.
Therefore, after this consolidation, the shares will possibly resume the upward trend, with the next main target being at the 38.6% retracement at 42.77.
Lloyds technical chart
