Why is the Lloyds share price in freefall?

The UK lender has seen its share price tumble more than 20% since the beginning of the year, though the stock has found support at 48p on Monday, with analysts from Barclays Capital hopeful its value will rise in 2020.

Lloyds shares have been in freefall since the start of the new year, with the stock tumbling 22% year-to-date, with the lender forced to make significant strategic changes in response to a challenging banking environment throughout 2019.

‘Given our clear UK focus, our performance is inextricably linked to the health of the UK economy,’ Lloyds CEO António Horta-Osório said. ‘Throughout 2019, UK economic performance has remained resilient in the face of significant political and economic uncertainty, supported by record employment, low interest rates and rising real wages.

‘Although uncertainty remains given the ongoing negotiation of international trade agreements, there is now a clearer sense of direction and some signs of an improving outlook,’ he added.

Lloyds closed at 49p a share on Monday.

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Barclays Capital upbeat about Lloyds price trajectory

Despite Lloyds challenging start to 2020, the stock has finally found support at 48p levels, with analysts from Barclays Capital remaining optimistic about its trajectory this year.

In March, analysts from Barclays Capital reiterated their ‘overweight’ rating for Lloyds and despite downgrading their target price to 70p a share, it still represents a potential upside for the stock of 42.8%.

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Lloyds: technical analysis

Lloyds has seen an impressive bounce from support, as the rout in the share price since mid-December comes to a halt at 48p. This level held back in August, and then provided the foundation for a remarkable surge, to a high of 70p by December, Chris Beauchamp, chief market analyst at IG said

‘While history may not repeat itself, the price is certainly fighting to move higher, even if the initial rally on 2 March was firmly knocked back,’ he said.

‘So long as it continues to hold at 48p, a more cautiously bullish view may emerge. If 48p is lost, then the December 2018 low at 46.8p comes into play. For now, the long-term range of 48p – 70p continues to hold,’ he added.

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