Lloyds Bank Share Price Eases Down On Interest Rate Cut, Weak UK GDP Forecast

Summary:
• The Bank of England reduced interest rates to the lowest in five years, and has added to Lloyds Bank share price downside amid weak UK economy

Lloyds Bank share price declined on Friday as investors digested implications of Bank of England’s (BoE) move to cut interest rates. The stock traded at GBX 62.58 at the time of writing, down by 1.2% on the daily chart. Nonetheless, it is still up by 15.1% year-to-date and has gained 2.7% in the last five sessions. This signifies an underlying bullish confidence in the stock.

The BoE announced on Thursday that its Monetary Policy Committee (MPC) had voted to cut interest rates from 4.75% to 4.50%, bringing borowing costs to the lowest since June 2023. The move has implications on bank earnings, as it translates to reduced net interest margins. Lloyds Bank’s position as one of the largest lenders in the UK predisposes it to significant impact from that front.

In addition, the BoE downgraded growth forecast for the UK economy from 1.5% to 0.75%. That also denotes reduced income for most financial institutions, and adds downward pressure on Lloyds Bank share price. However, the bank is likely to make significant savings down the line, as it plans to close several branches in the coming months.

Lloyds Bank (LSE: LLOY) plans to close 136 branches by March 2026, attributing the decision to reduced visits to physical banks by customers. Technological platforms like bank apps and online banking have become increasingly popular in recent years, reducing visits to physical branches by more than 50% in some branches in the UK.

Lloyds Bank Share Price Prediction

Lloyds Bank share price pivots at GBX 63.10 and the momentum indicator signals control by the sellers. That will likely establish the first support at GBX 62.60. However, an extended control by the sellers will break below that level and potentially test GBX 62.04.

On the other hand, breaking above GBX 63.10 will signal a shift by the momentum to the upside. With the buyers in control, the stock is likely to meet the first resistance at GBX 63.10. The downward momentum will be invalid if it breaks above that level. The resulting momentum could strengthen the upward momentum and potentially test GBX 64.00.