Where now for the Lloyds share price as PPI news sends it lower?
Lloyds has suffered after announcing the suspension of its buyback programme due to a spike in PPI claims.
Lloyds suspends buyback programme
The payment protection insurance (PPI) claims saga goes on, as Lloyds is forced to suspend its buyback programme due to another spike in the volume of claims by members of the public. The bank now faces an extra bill of £1.8 billion, up from a previous estimate of £550 million. The news comes off the back of the Royal Bank of Scotland (RBS) and Lloyds both increasing their provisions for PPI, adding around £1.3 billion between them.
The outlook continues to be relatively grim from a technical perspective. Longer term, the share price is still roughly where it was in May 2013. And while it has gained since then, especially when dividends are included, it has been unable to build a steady, upward trend. Sideways price movement has been the norm.
Lloyds share price: technical analysis
Rallies above 65p have proven all but impossible to sustain, and any hope the share price had of building a sustainable uptrend disappeared when the price stalled from mid-2013 onwards. The impending Brexit referendum saw the price head lower, beginning a downtrend that ended in early July 2016. The price traded briefly below 40p, providing an excellent buying opportunity for those brave enough to buy this dip.
But this rally ended at 64p in May 2017, and several attempts to break this level have failed since then. While the end of 2018 saw a decent rally, it too ran out of steam at 64p and the resulting sell-off pushed the shares back towards the low of 2018.
Today’s news confirms the bearish view on Lloyds, and with recent price action keeping it below 50p we have the makings of another leg lower. This would see the December 2018 low of 46.8p tested, but it seems unlikely that the downtrend will stop there.
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