Lloyds share price has been under intense pressure for the past few weeks amid looming recession fears in the UK. The LLOY stock has crashed more than 7% in price YTD and nearly 2% in the past week. Its total market capitalization is currently at £31.23 billion.
Lloyds share price has been trading sideways for the past week as concerns about the UK economy grow. Recently, Lloyd’s chief executive officer, Charlie Nunn warned that UK political uncertainty, regulatory costs, and a lack of focus on competitiveness in the UK have been heavily weighing on international investment in the country’s banks.
Lloyds Banking Group Plc reported a decline in its third quarter profits this year. In its statement, Lloyds posted a pre-tax profit of £1.5 billion for the third quarter which was below the consensus analysts’ forecast. Britain’s biggest mortgage lender also put aside £688 million for potential loans which saw the company’s profits decline.
UK’s Gross Domestic Product (GDP) for October came in higher at 0.5% indicating an expansion in the country’s economy. However, despite the bounce back in the economy, Jeremy Hunt said that the UK economy will likely get worse before it gets better. In his statement, Hunt said:
“About a third of the world’s economies are predicted to be in recession, either this year or next. We’re no different in this country and truthfully, it is likely to get worse before it gets better,”
With the high inflation and the BoE’s readiness to increase interest rates again later this week, UK’s economy is likely to contract for the rest of the winter, and perhaps even beyond.
Lloyds Share Price Forecast
The daily chart shows that Lloyds share price has been under intense pressure for the past few weeks. The stock ended its previous trading session 1.43% lower at 45.77p. It is moving slightly above the 25-day and 50-day moving averages. Its Relative Strength Index (RSI) is at 62, which is close to the overbought region.
Therefore, with the ongoing economic concerns in the UK, Lloyds share price outlook remains uncertain. A move past the resistance level at 47.495p will have the bears eyeing this year’s high at 56p. However, a flip below the 50-day moving average will initiate a bear run.