Lloyds (LON: LLOY) share price continued their spectacular comeback this week as UK stocks continue firing on all cylinders. The stock surged to a high of 54.17p on Thursday, the highest point since 2020. It has soared by more than 145 percent from its pandemic lows.
Bank of England hikes
Lloyds Bank and other British banks have defied gravity in 2023. As we wrote earlier here on Thursday, the FTSE 100 index is sitting at its record highs even as its American counterparts recoil. It is one of the best-performing global indices.
UK stocks have done well even as concerns about the economy remained. Last week, the IMF warned that the UK will sink into a deep recession in 2023 and underperform the heavily-sanctioned Russia. As the biggest bank in the UK, Lloyds Bank is usually seen as a barometer of the economy.
Therefore, Lloyds stock price is soaring as investors predict that the Bank of England (BoE) will leave interest rates higher for a while. Lloyds benefits when interest rates are high because they usually increase its net interest margin.
However, fears of a recession could also lead to high delinquency. A key hope for the bank is that unemployment remains sharply lower, meaning that most people can handle to pay their loans. Clarity of this will be seen on February 22nd, when the bank will publish its Q4 and full-year results.
Analysts are enthusiastic about the LLOY share price. For example, those at Credit Suisse reiterated their bullish view and named it as their top pick. Similarly, Citigroup and Barclays analysts have a buy and overweight rating on the stock.
Another catalyst for Lloyds shares is the ongoing rumours of Standard Chartered acquisition by First Abu Dhabi Bank. Stanchart share price surged by over 10% after these rumours intensified. According to the FT, the Middle Eastern bank is willing to pay between $30 billion and $35 billion.
Lloyds share price forecast
Lloyds stock has just done something extremely spectacular. As shown above, the stock managed to move above the key resistance point at 53.41p this week. This was a notable level for two main reasons. First, it was the highest point in 2022. Also, by cruising above it, it invalidated the double-top pattern that has been forming. The main risk is that this move could be a false breakout since volume has been falling.
Still, the stock seems to be forming a bullish cup and handle pattern and the 50-day and 200-day moving averages have made a bullish crossover. Therefore, the outlook for the stock is bullish, with the next level being at 60p.
The post Lloyds share price: Something spectacular just happened appeared first on Invezz.