When could the Lloyds share price reach £1?
With Lloyds shares trading around 61p, we examine the key factors that could drive the banking giant's stock back to the £1 level not seen since 2008.
What's on this page?
Current Lloyds market position
Lloyds Banking Group shares currently trade at around 61p, significantly below their pre-financial crisis levels. With a forward price-to-earnings (P/E) ratio of 8.77 compared to the FTSE 100's average of around 12, the stock appears undervalued by traditional metrics.
The path to £1.00 would represent a near 64% increase from current levels – a substantial move that would require several catalysts to align.
Economic drivers
The UK's largest domestic bank remains heavily exposed to British economic conditions. Any path to £1.00 would likely require sustained UK economic growth, something that remains elusive with recent gross domestic product (GDP) figures showing minimal expansion.
Share dealing investors need to consider that Lloyds' fortunes are intrinsically linked to the health of the UK housing market and consumer confidence, both of which face ongoing pressures.
Interest rate impact
Interest rates play a crucial role in bank profitability. While higher rates have supported Lloyds' net interest margins, expected rate cuts by the Bank of England (BoE) in 2025 could compress these margins.
However, a gradual reduction in rates might actually benefit the bank by stimulating lending activity while maintaining reasonable profit margins.
Regulatory considerations
The ongoing FCA investigation into motor finance mis-selling poses a significant headwind. Previous regulatory issues like producer price index (PPI) have historically weighed heavily on UK bank valuations, and this investigation could impact investor confidence.
Broader market sentiment
Current global investor sentiment towards UK equities is hot, with many fund managers rotating out of overvalued US technology stocks and buying undervalued UK stocks which are considered to be “cheap”, helped by a weak British pound.
A broader rerating and ongoing investments into UK assets would likely be necessary for Lloyds to approach £1.00. Having said that, the fact that the FTSE 100 rallied strongly to a new record high, nearly hitting the 8,700 mark, shows that the UK blue chip index is benefitting from large inflows.
This has also been the case for UK banks which make up around 13% of the FTSE 100. Lloyds in particular has outperformed not only the FTSE 100 with its near 12% year-to-date gain but also its UK peers.
Lloyds Banking Group year-to-date peer and FTSE 100 comparison chart
Technical outlook
From a technical perspective, Lloyds faces significant resistance in the 62.50p-to-63.50p region which consists of the October 2024 and January highs. This resistance area would need to be overcome for a long-term bullish trend to unfold.
Lloyds Banking Group daily candlestick chart
The January-to February price gap at 60.30p-to-59.00p may first get filled, though. Were this to happen, a potential longer-term buying opportunity may present itself.
Key support for the long-term uptrend is the 53.08p-to-52.44p support zone. It consists of the March 2024 high and the June, August, October, November and December 2024 lows as well as the January trough. As such it is expected to hold, were it to be revisited at all.
Lloyds Banking Group monthly candlestick chart
Were a monthly chart close above the October 2024 peak at 63.46 to be made, the major 70.02p-to-74.00p resistance zone would be targeted. It comprises the October 2013-to-October 2015 lows as well as the March 2016-to-2019 highs. It therefore represents a key resistance zone which will most likely cap any future advance in the Lloyds share price for several months, if not years.
Potential catalysts for £1
Several factors could help drive Lloyds toward £1.00:
- Sustained UK economic growth
- Improved housing market activity
- Resolution of regulatory uncertainties
- Increased international investor interest in UK equities
- Continued strong dividend payments
Timeline considerations
While reaching £1.00 is theoretically possible, the timeframe is crucial. Based on current projections and market conditions, this target appears to be a multi-year objective rather than a near-term possibility.
How to trade Lloyds shares
- Research the company thoroughly and monitor UK economic indicators
- Choose whether you want to trade or invest
- Open an account with us
- Select your position size
- Place your trade
Investment considerations
Investors considering Lloyds should focus on:
- Dividend yield and sustainability
- UK economic indicators
- Interest rate trajectories
- Regulatory developments
- Technical resistance levels
Conclusion
While Lloyds reaching £1.00 represents an ambitious target, the bank's solid fundamentals and market position suggest potential for appreciation. However, this would likely be a gradual process requiring significant improvements in UK economic conditions and market sentiment.
In the meantime, the stock's attractive 4.7% dividend yield and potential for moderate capital appreciation may offer opportunities for patient investors, though as with any investment, thorough research and risk management remain essential.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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