British banks are groaning under the weight of a possible no-deal Brexit, and the performance of Lloyd share price in the last two weeks is lending credence to this notion. UBS Global Wealth Management seems to agree with this standpoint, and it has predicted a significant weakening of the Pound along with a 20% slump in UK banking stocks if this scenario plays out.
InvestingCube's S&R Levels
Reuters reported comments made by UK Chief Investment Officer of UBS Global Wealth Caroline Simmons, in which she said a no-deal Brexit “cannot be ruled out”. While UBS seems bullish on UK blue-chip stocks as a result of a weaker sterling driving investment flows, the bank is forecasting a 15-20% slump in UK banking stocks if a deal between the UK and the EU does not happen.
The introduction of the Internal Markets Bill into the UK Parliament by UK PM Boris Johnson’s government is said to contravene aspects of the Brexit Withdrawal Agreement. The UK has endured sharp criticism from EU policymakers as well as US politicians, the latest being US Democratic candidate for the US Presidency, Joe Biden.
Lloyds share price has taken a massive hit from the renewed Brexit imbroglio and is now trading close to multi-year lows at 24.955. Lloyds share price is down nearly 12% in September.
Technical Outlook for Lloyds Share Price
Lloyds share price is in the 4th week of a sustained downtrend and is currently challenging support at 24.745. However, the daily chart shows a potential morning star formation, which could be completed if we have a higher close on today’s candle. This pattern will keep Lloyds share price above the 24p mark for the time being and send the asset towards the 25.875 price resistance. This price level marked key support on several occasions and could offer a stern test for any bullish pullback. If the upside pullback move successfully breaches the 25.875 resistance, 27.470 and 29.765 could come into view.
Any upside pullbacks may be retracements that permit renewed selling on rallies. Therefore, any of the resistance areas mentioned could be points where renewed selling occurs, ultimately targeting a breach of the 24.745 support for the week. This opens up an opportunity to target 22.70 (December 2011 lows).