Lloyds share price has been under intense pressure for the past few weeks amid the recent debacle in the banking sector. The LLOY stock has slipped by more than 9% since the start of the month. Lloyds stock price had been among the worst performers in UK’s benchmark FTSE 100 index earlier this month.
UK Economic Sentiment
Lloyds share price has had a rough past few weeks on the back of the recent global financial crisis. Even so, it was not alone as other banking stocks such as Barclays, NatWest, Prudential, Standard Chartered, and HSBC crashed too. However, the banking stocks have been on their journey to recovery for the past few days as UBS rushed in to save the day.
Earlier on Sunday, the largest Swiss financial institution, UBS, agreed to buy its embattled rival Credit Suisse for $3.25 billion. According to the Swiss National Bank, the merger deal would help in easing the banking fears and protect the Swiss economy. The announcement by UBS saw most banking stocks inch higher.
Investors are digesting the latest UK Consumer Price Index (CPI) data released earlier on Wednesday. Data by the Office for National Statistics (ONS) shows that the key inflation data rose by 10.4% in the 12 months to February 2023, up from 10.1% in January. On a monthly basis, CPI increased by 1.1% in February, up from 0.8% in January.
The Bank of England (BoE) is set to release its inflation letter, as well as its Monetary Policy Committee (MPC) meeting minutes later in the day. The BoE is also expected to announce its interest rate decision for March later today. Traders expect the BoE to further increase its interest rates amid surging inflation.
Lloyds Share Price Outlook
Lloyds share price was in the red in its latest trading session amid a rise in UK inflation. The LLOY stock price remains below the 25-day and 50-day moving averages, as well as the 50-day and 200-day exponential moving averages. Its Relative Strength Index (RSI) is below the neutral zone, pointing to a slowdown in buying pressure.
Therefore, the LLOY stock price is likely to slip further in the short term as the BoE hikes interest rate to curb the surging inflation. if this happens, the next logical support levels will be 46.820p and 42.825. On the flip side, a move past the 25-day moving average at 50p will invalidate the bearish view.