London, Jan 22, 2026, 09:30 GMT — Regular session
- Lloyds shares rose roughly 1.5% shortly after the London market opened
- UK borrowing comes in below forecasts, easing short-term fiscal concerns
- Following an unexpected inflation report, attention shifts to the Bank of England’s rate trajectory; Lloyds is set to release results on Jan 29
Lloyds Banking Group (LLOY.L) shares climbed 1.5% to 102.90 pence by 0930 GMT Thursday, up from Wednesday’s close of 101.40 pence. The stock fluctuated between 102.48 and 103.55 pence, with roughly 21.9 million shares traded. 1
This matters as the UK rate debate heats up once more, with bank shares often reacting sharply. Lloyds, closely linked to UK retail and mortgage lending, can see earnings forecasts swing on even minor changes in rate expectations.
Rate bets directly affect net interest margin — the difference between a bank’s loan earnings and deposit costs — and can impact credit quality if rising borrowing costs begin to take a toll. With earnings reports coming next week, some investors are pulling back while others are stepping up their risk exposure.
Thursday’s UK fiscal data offered a clearer picture to start the session. Public sector net borrowing for December stood at £11.578 billion, below the expected £13.0 billion, boosted by stronger tax revenues, Reuters reported. Joe Nellis, an economic adviser at MHA, described the numbers as “cautious reassurance.” But Elliot Jordan-Doak of Pantheon Macroeconomics cautioned the outlook remains “vulnerable to reversal as political pressures mount,” noting that any impact on gilts — UK government bonds — could push up borrowing costs. 2
Morgan Stanley has delayed its forecast for the Bank of England’s next rate cut from February to March, following the latest inflation figures. The bank now anticipates three 25-basis-point reductions—in March, July, and November. (One basis point equals 0.01 percentage point.) The BoE’s next meeting is set for Feb. 5, where the Bank Rate is expected to remain steady at 3.75%. According to Reuters, citing LSEG data, markets are currently pricing in about 42 basis points of cuts by the end of 2026. 3
Inflation sets the stage here. Data released Wednesday showed headline inflation ticked up to 3.4% in December, compared with 3.2% in November and above the Reuters poll prediction of 3.3%. Services inflation hit 4.5%, in line with expectations. PwC economist Adam Deasy called the increase a “speed-bump,” while Nicholas Crittenden of the National Institute of Economic and Social Research said the BoE should “not be worried by these numbers.” Bank of England Governor Andrew Bailey expects inflation to near 2% by April or May. 4
For Lloyds, “higher for longer” interest rates boost income from its loan book but risk dampening mortgage demand and pushing up arrears if households hit their borrowing limits. It’s a tricky balance. Traders watch both the BoE and housing market closely for signals.
Lloyds is set to release its preliminary 2025 results on Jan. 29. CEO Charlie Nunn and CFO William Chalmers will present the figures at 9.30am. The full annual report for 2025 is scheduled for Feb. 18, according to the group’s calendar. 5
Risks remain. In October, Lloyds added another 800 million pound charge related to the UK motor finance mis-selling scandal, pushing its total provisions to 1.95 billion pounds. RBC analyst Benjamin Toms noted then there was “some relief” that the increase wasn’t bigger. 6
Next week’s results will reveal if Lloyds can maintain margins and keep costs in check, with investors watching closely for changes to conduct provisions. The Bank of England’s decision on Feb. 5 then stands as the next major checkpoint for UK lenders.
