The Lloyds share price popped to the highest level since June as investors reflect on the rising hopes of a Bank of England interest rate hike. The LLOY stock is trading at 49.27p, which was about 20% above the lowest level in September.
Bank of England rate hike bets
Analysts are getting more convinced that the Bank of England will hike interest rates in November or December. In a statement on Monday, analysts at Goldman Sachs predicted that the bank could hike in November.
Similarly, analysts at ING wrote that it was a close call between November and February. The statement came after Andrew Bailey, the bank’s governor, delivered a relatively hawkish statement on Sunday. He did not push back against the talk that a rate hike will happen sooner.
Higher interest rates tend to benefit companies like Lloyds Bank that make money by offering loans. Of all the FTSE 100 banks, Lloyds has the best odds of benefiting in a high-interest rate environment in the UK. This is simply because, unlike banks like Barclays and HSBC, it does not have a lot of exposure in the trading business.
Lloyds share price forecast
The four-hour chart shows that the LLOY share price has been in a major bullish trend in the past few weeks. The stock managed to move above the key resistance level at 46.91p, which was the highest level in August. It is also being supported by the 25-day and 50-day moving averages and the Relative Strength Index (RSI).
Therefore, the stock will likely blast past the resistance level at 50p, where it struggled moving above in June. On the flip side, a drop below the support at 46.92p will invalidate this view.