The rise in interest rates in the U.S. will not affect the stock. It is interest rates in Britain that you have to be concerned about, and in this case it looks as if the next move will be down.So that will help the stock.
On the question of the U.S. dollar versus the pound, I think that it may rise for a while (a short term rally in the U.S. dollar is taking place) but then fall again. There is no doubt that if the U.S. dollar rises it will adversely affect the stock. No one really knows what will happen to the U.S. dollar (it depends on sentiment around the world).
If China does revalue (and I think they will wait as long as they can before revaluing - as far as I know they are obliged to take some action by 2007)then I could see it taking some pressure off the pound,the euro and the Canadian dollar BUT I think these currencies will still appreciate a little against the U.S.dollar.The U.S. trade deficit is huge and is showing no signs of reversing yet.The truth is that the pound and the euro are high enough already - you don't get much value for a pound in Britain or a euro in Euroland but it is the necessity for the U.S. dollar to drop that is driving these up. To sum up, I don't think the pound/dollar rate will affect the return on LYG by much. Rather it will be the performance of LYG in growing earnings going forward which will be the dominating factor.