As a UK-focused company, I think that the Lloyds Banking Group PLC (LON:LLOY) (LLOY.L) share price could experience a challenging period. Brexit is now just a matter of weeks away, and MPs seem to be struggling to deliver it.
At the moment, it seems as though Theresa May’s Brexit deal will fail to gain a majority in the House of Commons. This does not surprise me, since the Conservatives themselves do not have a majority. This means they must rely on cross-party support, which has not been forthcoming in recent months.
Further, a minority of Conservative MPs are set to vote against the deal, which means that a relatively large number of non-Conservative MPs would be needed in order for the deal to be agreed by Parliament.
Therefore, I think that the Lloyds share price could experience a volatile period as uncertainty regarding the future relationship between the UK and the EU looks set to ramp-up over the next couple of weeks.
Of course, it has been my view for some time that a no-deal Brexit is the most likely result. There are so many different ideas within the House of Commons on what the future relationship between the UK and EU should look like that finding one that is able to gain a majority in Parliament seems to be a tough ask.
Although I’m cautious about the prospects for Lloyds in the near term, investors seem to be increasingly upbeat about its outlook. Its share price has risen 7% since the start of 2019.
In the long run, I believe there could be further growth ahead. I’m optimistic about the UK economy’s prospects whether there is a deal or no deal on Brexit. As a result, I believe that the bank’s P/E ratio of around 8 may indicate that there is a margin of safety on offer from a long-term investment perspective.