Lloyds share price rallies to nine-year highs
Lloyds has continued to rally, making further gains in June and July and rising to its highest level since 2015.
Lloyds share price boosted by confidence in UK outlook
Several positive factors are contributing to Lloyds' recent stock performance and future outlook. The recent election has brought political stability, which typically boosts investor confidence and economic performance.
As the UK's largest mortgage lender, Lloyds stands to benefit from a potential recovery in the housing market. Additionally, higher interest rates have led to expanded margins for the bank. However, Lloyds also faces some challenges. There's a risk of margin shrinkage if interest rates are cut, which could happen in the near future.
This concern is underscored by the bank's first quarter (Q1) results, which showed a 10% drop in underlying net interest income. These factors create a complex picture for Lloyds' future performance, balancing optimistic market conditions against potential financial headwinds.
Lloyds share price still not overly expensive
Despite the gains in the share price, Lloyds trades at just eight times earnings, and this is only slightly higher than the five-year average of 6.6.
Overall, investors, particularly overseas ones, may continue to keep Lloyds on their watchlist, particularly should the UK’s better economic outlook translate into a resurgence of gross domestic product (GDP) growth. Lower mortgage rates and slowing inflation should also mean consumers have more disposable income, boosting housing market activity.
Lloyds share price – technical analysis
The Lloyds share price is up by 50% from the lows of February, a remarkable achievement for such a stock.
Since April it has created higher lows, and has now moved back to the 59p highs last seen in 2015. So far there seems little sign of any reversal developing; a close back below 56p and trendline support from the April low might signal the beginning of a retracement in the near term.
A close above 59p takes the price to levels not seen since the 2008 financial crisis, and from there the next big level to watch would be the 2003 low at 95p.
Lloyds chart
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