Lloyds‘ (LSE: LLOY) shares have experienced an astonishing level of volatility in 2026. After breaking through the £1 level early in the year and then soaring to 115p in February, they’ve crashed back to 91p in recent days.
Are we likely to see £1 again in 2026? Let’s discuss.
Momentum in early 2025
When Lloyds’ share price shot up to 115p in February, the outlook for the bank was looking pretty favourable. For a start, the company had just produced a strong set of results for 2025 in which profit before tax was £6.7bn, up 12% year on year.
On the back of these results, the company had hiked its dividend by 15% and also announced a £1.75bn share buyback. These moves indicated that management was confident about the future.
Secondly, the backdrop for banks in general was looking healthy. Economic conditions were robust, consumers were servicing their loans, global equity markets were at high levels (meaning potential for strong wealth management revenues), and it was looking like artificial intelligence (AI) may generate substantial cost savings.
A new landscape
Over the last month or so though, the landscape’s changed quite dramatically. With oil prices at sky-high levels due to the Iran conflict, the chances of an economic slowdown are increasing. High oil prices essentially act as an extra tax on consumers and businesses and they can negatively impact economic growth.
They can also have a direct impact on banks. As petrol and heating costs rise, household discretionary income shrinks – this can lead to a spike in defaults on mortgages, credit cards and auto loans.
Another issue is that AI-related job losses have started to pick up. If this trend continues and a lot of people end up out of work, it could put further pressure on Lloyds’ loan book.
Having said that, AI could also lead to efficiencies for Lloyds. So it could actually help the bank.
We’re also seeing stock market volatility – this month the FTSE 100 index has fallen close to 10%. This could potentially impact Lloyds’ wealth management revenues.
One other thing worth pointing out is that digital bank Revolut (Europe’s most valuable start-up) was recently awarded a full UK banking license. This will enable it to compete head-to-head with high street banks in areas such as current accounts and consumer lending.
This is bad news for Lloyds because Revolut’s far more innovative and is very popular with younger generations.
A return to £1?
So going back to my question at the top – will we see £1 again in 2026? That’s hard to know. There’s definitely a chance that we could see £1 if geopolitical instability dies down and oil prices fall. However, given the complex backdrop, there’s also a chance that the shares could remain under pressure.
Are they worth considering for the long term? Potentially – as Lloyds becomes a more tech-focused business in the years ahead it could have success.
Personally though, I feel there are better opportunities in the market to consider right now.
