Lloyds share price has been under intense pressure for the past week amid concerns about the UK economy. The LLOY stock has crashed by more than 25% from its highest point this year in January. Its total market capitalization stands at 28 billion pounds.
Lloyds Share Price Outlook
Lloyds Banking Group is one of the UK’s largest financial services organizations with 30 million customers. As such, the bank tends to highly react to the country’s economy. Recently, there have been concerns about the UK’s economy, with some analysts comparing it to an emerging market.
The new administration under the prime minister, Liz Truss, embraced more budget deficits by slashing taxes and boosting investments. The policies are expected to spur more inflation and a higher unemployment rate.
However, on Monday, October 3, the UK government backtracked on a key part of its tax-cutting plan. This was after facing a backlash from financial markets and a rebellion in its ranks. This saw the pound jump as much as 1% before handing back the gains. However, this was a major setback for new prime minister Liz Truss and her economic agenda.
Analysts are also concerned about Lloyds’ relatively inflated cost of equity. The bank’s financials show that its cost of equity is about 15%.
There are also concerns about the British pound. Analysts believe that the collapse of the sterling pound could force foreign shareholders to pull away from their positions.
LLOY Share Price Analysis
The daily chart shows that Lloyds share price has been in a steep freefall for the past week. The stock has crashed below the 25-day and 50-day moving averages. Its Relative Strength Index is stable at 51.
Therefore, the stock is likely to continue falling as traders target the next key support at 38.12p, its lowest level since March. However, a move above the key resistance level at 44.465p will invalidate this view.