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.
IMHO, China unlikely to revalue unless forced by economic distortions damaging THEIR economy (they don't care about rest of world). This is possible since keeping currency down causes inflationary pressure. Unfortunately, this is a very slow process.
Regarding strength of pound--it has the opposite effect, pushing prices/inflation down. Proper monetary policy requires Britain to lower interest rates. Even if does not happen right away, a strong currency will make it inevitable. This is good for British stocks (assuming damage to economy from delaying cutting interest rates too long does not exceed benefit of cut)