Lloyds share price fell on Friday in response to the unexpected hawkish turn of events at the Bank of England. Yesterday, BoE policymaker Michael Saunders hinted that the BoE might end its asset purchase program due to the unexpected rise in inflation.
Annualized UK inflation is projected to hit 4% at the end of 2021. If the BoE ends its bond-buying program, it could dry up the cheap funds used by financial institutions and other trading entities to invest in the capital market. The cheap funding windows created by quantitative easing provided the basis for the surge of many stocks and the indices in general during the worst of the pandemic.
Lloyds share price is expected to recover steam after the Bank of England removed the “extraordinary guardrails on shareholder distributions” imposed at the height of the pandemic, effectively allowing for a full resumption of dividend payments to shareholders by UK banks.
Technical Outlook for Lloyds Share Price
The resumption of the breakdown move follows the rejection of the return movement of Wednesday. It allows for the measured move to aim for completion at 43.845. This move needs to take out the 44.99 support in the process. The 42.995 and 42.015 support levels are additional targets to the south if the correction on Lloyds share price is more extensive.
On the flip side, a bounce on the 44.99 support (8 July high) allows for truncation of the measured move, targeting another return move towards 46.615. If the price can hit 48.125, the upside bias returns. This move would also put 49.205 and 50.435 into the mix as potential upside targets.