Cardiff, Wales, UK, August 31, 2016: Lloyds bank advertising sign outside the entrance to their retail branch in Queen Street

Analysts are Bullish on the Lloyds Share Price – Should You?

The Lloyds share price crawled back on Monday as investors attention turned to the upcoming UK inflation data scheduled for Wednesday. The LLOY stock rose by more than 1.7% to trade at 43.30p, which is about 4.65% above the lowest level last week. 

Lloyds Bank and inflation data

Lloyds is the biggest national bank in the UK with a market capitalization of more than 30 billion pounds. The bank has a presence in almost all locations in the UK through its eponymous bank and other branches like Scottish Widows and Bank of Scotland.

The biggest catalyst for the LLOY share price this week will be the UK consumer price index (CPI) data that is scheduled for Wednesday this week. Economists expect these numbers will show that the headline CPI rose to almost 3% in August. This growth will be because of the impacts of the “Eat Out to Help Out” campaign and the recent supply shortages that have pushed prices higher.

The UK inflation data will come a day after the country publishes its latest employment numbers. Analysts expect these numbers to show that the country added thousands of jobs in July as the ongoing labour shortages continued.

These numbers will have an impact on the Lloyds share price because they will form the basis for the upcoming Bank of England (BOE) interest rate decision. The bank will use these numbers to assess whether to start slowing down its asset purchases. This tapering will be the initial step towards rate hikes, which are positive for banks.

The data will come at a difficult time for Lloyds. Its stock has crashed by more than 14.40% from its highest level in June. The company has also been sued by a group of customers in relation to its inflation-linked mortgages.

Still, analysts are bullish on Lloyds Bank. For example, those at Royal Bank of Canada (RBC) have a target of 51p while those at JP Morgan, Deutsche Bank, and Barclays expect the Lloyds share price to rise to more than 57p.

Lloyds share price forecast

The LLOY stock price tumbled to 41.35p last week as sentiment in the industry weakened. This was an important level since it was along the lower line of the descending channel. It was also the lowest level since April. On the four-hour chart, the shares remain below the 25-day and 50-day moving averages. 

Therefore, despite the jump today, the path of the least resistance for the Lloyds share price remains to the downside.