The Lloyds share price has started the new trading week on a cautious note and is off 0.43% currently. This follows a negative end to the previous week that saw the stock losing 0.5%. The muted activity on the stock comes as the Governor of the Bank of England (BoE), Andrew Bailey, is scheduled to speak on Monday and Tuesday at two key events.
Bailey will testify on the Bank of England Financial Stability Report on Monday before the Treasury Select Committee. He could make comments that shine a light on the future of monetary policy in England, with implications on the performance of banking stocks for the rest of the week.
The Lloyds share price has undergone a steep correction from its 2-year recovery move that peaked in January 2022. However, Credit Suisse believes that investors have been too cautious in trading the stock, which remains one of the investment bank’s top picks. In addition, credit Suisse highlights the potential for bigger profits for the bank from future BoE rate hikes.
Credit Suisse analysts believe a 2.25% rate hike will translate to Lloyds’s hitting a 2-7% net interest income between 2022 and 2024. This upgraded outlook could see Lloyds share price priming itself for an appreciation, having hit the 61.8% Fibonacci retracement level from the weekly chart’s 1 February 2021 swing low to the swing high of January 2022.
Lloyds Share Price Forecast
The resolution of the rising wedge has resulted in a downside move that continues to respect the descending trendline that connects the 2022 peaks. The price action is testing support at 42.015 (12 May 2022 low). A breakdown of this pivot clears the way toward the 40.005 psychological support and site of the 11 March 2021 previous low.
This move must take out the 21 April 2021/30 June 2022 lows at 41.225 to be actualized. Additional downside targets will come alive on a breakdown of 40.005, which are at 38.225 (26 February 2021 and 7 March 2022 lows) and 37.110 (18 February 2021 low).
On the other hand, a recovery in the Lloyds share price may be seen if the price action takes out the descending trendline. This move comes from a bounce off the 42.025 support level, targeting 43.160 (19 May low and 4 July high). A break above this level brings 44.990 into the mix, being the site of the 25 April low/10 June high. Additional northbound targets rest at 45.770 and 47.945, where the 14 March 2022 high is located.