The Lloyds (LON: LLOY) share price is hovering near its highest level this year ahead of Rishi Sunak’s budget speech and the company’s earnings on Thursday. The stock is trading at 48.72p, which is a few points below the YTD high of about 50p.
Will Lloyds Bank disappoint?
On Friday, Barclays Bank published strong quarterly results, helped by its investment banking division. And on Monday, HSBC will be in focus as it publishes its quarterly results.
Lloyds, the biggest mortgage lender in the UK, will publish its earnings on Thursday. Analysts expect that the bank’s earnings will be relatively softer than those of Barclays and American giants like Goldman Sachs and Morgan Stanley.
This is because, unlike these banks, Lloyds does not have a sizable investment bank and wealth, management division. This could change soon since the company’s new CEO was the head of wealth management in HSBC.
Still, there are some ket catalysts that could push the Lloyds share price higher ahead of earnings. For example, Rishi Sunak, the Chancellor, will deliver a budget speech this week. In the speech, he is expected to announce some tax cuts for London banks in a bid to make them more competitive.
Therefore, since Lloyds is the biggest domestic lender in the UK, it will likely react positively to the announcement. The stock will also likely react to the rising odds that the Bank of England (BOE) will hike interest rates earlier than expected.
In a statement last week, the bank’s chief economist said that the bank will have a deliberation about rate hikes in the upcoming meeting. He expects that the rate of inflation will rise to about 5%.
Lloyds share price forecast
The daily chart shows that the Lloyds share price has been in a major bullish trend in the past few weeks. It has risen by more than 18% from its lowest level since September. At the same time, it seems to be forming a cup and handle pattern. In price action analysis, this pattern is usually a bullish sign. The stock is also above the 25-day and 50-day moving averages.
Therefore, while a bullish breakout will likely happen, we can’t rule out a drop to the support level at 47p as the shares form a handle part.
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