I’ve had a couple of weeks off, away from stock markets, and I haven’t even thought about my share prices. Not even my personal albatross, Lloyds Banking Group (LSE: LLOY). And it was lovely. But now I’m back, so what has the Lloyds share price been doing while I wasn’t looking?
Ah, it’s at 49.5p as I write, hovering just below the 50p level. And still unable to break through it and stay there. It seems I’ve missed nothing. The shares have made a couple of attempts during 2021, briefly rising above ten shillings in early June before falling back again.
A second ascent kicked off in September, taking the Lloyds share price to its 52-week high of 51.58p by the start of November. That wasn’t sustained either, but at least the fallback has been modest this time. So what’s the chance of one last surge pushing Lloyds shares above half a pound by the end of 2021? And can they possibly stay there if the feat is achieved?
No interest rate rise yet
One thing that I thought would give Lloyds a boost hasn’t happened. I’m talking about an interest rate rise. Inflation is gaining pace, with the Consumer Prices Index (CPI) up 4.2% in the 12 months to October. That’s the highest it’s been in a decade.
An interest rate rise is looking inevitable, with the only questions being when and by how much. It was looking increasingly as if we’d see a rate rise early in the new year. But with economic activity remaining strong in November, some are calling for a December rise. If that happens, I think we could well see Lloyds ending 2021 above 50p.
Q3 figures failed to impress
What else might boost the Lloyds share price? Well, the bank’s Q3 update on 28 October preceded the latest jump above 50p. But even a pre-tax profit of £5.1bn for the first nine months of the year wasn’t enough to make it stick. The previous year had been badly hit by Covid, with the equivalent 2020 period bringing in just £620m, so it’s hard to judge the improvement. But it did make it look like Lloyds is approaching business as usual again.
The next scheduled update from Lloyds won’t be with us until 24 February. We should get 2021 full-year results then. And I can’t help thinking many institutional investors will be waiting to see those before they think about upping their investments in Lloyds.
Lloyds share price prediction?
As an outcome of that, I think the Lloyds share price could remain largely directionless for the next few months. My Motley Fool colleague Jon Smith has explained why he thinks Lloyds could reach 55p by the end of the year. So what do I think?
The Bank of England’s next meeting is scheduled for 16 December. There might be no interest rate rise as a result. Or we might get a disappointingly small one. In either of those cases, I’d stick my finger on 50p for the year-end Lloyds share price. But if we do see a decent rise, I think Lloyds could end the year even higher than Jon’s suggested 55p. Dare I hope for 60p?
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Alan Oscroft owns shares of Lloyds Banking Group. The Motley Fool UK has recommended Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.