In my opinion, this was best meme on the Fintwit at the end of last week:
It essentially captures the mood in UK financial circles at the moment as well, with the freefalling pound needing a rescue by the Bank of England. The question is, what can the central bank really do?
Verbal intervention is one but at this stage, they might need to send a bigger message to markets. That said, the pound is very much in the same situation as the yen when it comes to the intervention play. As much as the BOE would like to try and do something, the fundamentals dictate that the path of least resistance is still for a lower pound against the dollar.
An emergency rate hike looks to be the most plausible tool but then again, I would argue it will just be a temporary solution. It will be their first line of defense for the currency and to convince markets, they will have to go big on this in my view.
It's a tough situation to be in for Bailey & co. and that was indeed made much, much tougher after Truss' and Kwarteng's budget announcement at the end of last week. Oof.
